The firm Company A has an asset which was purchased for $80,000 and was depreciated $3,000 per year for the first five years. At the beginning of year 6 the firm impairs the asset by $7,000 and shortly thereafter they sell the asset for $50,000 in cash.

a. Whats the Gain or Loss on the sale (show your calculations)?

Assume that the time between impairment and sale is short so no additional depreciation is taken in that period.

b. What are the financial statement effects of the sale?

Assets	=	Liabilities	+	Equity		Sales	-	Expenses	=	Profit