A company sold a machine for $15,000 in cash. The machine originally cost$38,000 and accumulated depreciation was $20,000. What's the gain or loss on the sale of machinery?

Step 1: Define the Problem

Identify the key components:

• Selling price of the machine: $15,000
• Original cost of the machine: $38,000
• Accumulated depreciation: $20,000

Step 2: Break Down the Problem

Calculate the book value of the machine and determine the gain or loss:

1. Calculate the book value of the machine.
2. Determine the gain or loss by comparing the selling price to the book value.

Step 3: Apply Relevant Concepts

• Book Value: Original cost minus accumulated depreciation.
• Gain or Loss: Selling price minus book value.

Step 4: Analysis, Verify and Summarize

1. Calculate Book Value: $\text{Book Value} = \text{Original Cost} - \text{Accumulated Depreciation} = 38,000 - 20,000 = 18,000$

2. Determine Gain or Loss: $\text{Gain/Loss} = \text{Selling Price} - \text{Book Value} = 15,000 - 18,000 = -3,000$

   Since the result is negative, it indicates a loss.

Final Answer

The company incurred a loss of $3,000 on the sale of the machinery.