On January 1, 2017, Marigold Corp. purchased for $684000, equipment having a useful life of ten years and an estimated salvage value of $41400. Marigold has recorded monthly depreciation of the equipment on the straight-line method. On December 31, 2025, the equipment was sold for $180000. As a result of this sale, Marigold should recognize a gain of

To calculate the gain on sale of equipment, we need to determine the book value of the equipment on December 31, 2025. The book value is the difference between the original cost of the equipment and the accumulated depreciation up to the date of sale.

The original cost of the equipment was $684,000, and the estimated salvage value was $41,400. Therefore, the depreciable cost of the equipment was $684,000 - $41,400 = $642,600. Since the equipment has a useful life of ten years, the annual depreciation expense is $642,600 / 10 = $64,260. The monthly depreciation expense is $64,260 / 12 = $5,355.

From January 1, 2017, to December 31, 2025, the equipment was used for 107 months (9 years and 11 months). Therefore, the accumulated depreciation up to December 31, 2025, is $5,355 x 107 = $573,885. The book value of the equipment on December 31, 2025, is $684,000 - $573,885 = $110,115.

Since the equipment was sold for $180,000, Marigold should recognize a gain of $180,000 - $110,115 = $69,885.

Hope this helps!