8 Winnick Company owns a building purchased January 1t 2012

8. Winnick Company owns a building purchased January 1t, 2012 at a cost of $500,000. Depreciation of S10,000 is recorded at the end of every December including 2017(six years total). The building was sold for $600,000 on July 1\", 2018. Winnick should record a gain of: a) $160,000 S165,000 c) $170,000 d) $175,000

Solution

b) $165,000

Cost of building = $500,000

Accumulated depreciation = $10,000 * 6.5 years = $65,000

Book value of the building as July 1st 2018 = $500,000 - $65,000 = $435,000

Gain on sale = $600,000 - $435,000 = $165,000