Lassen Corporation has incurred a loss of $32000 from this transaction
The gain or loss on the sale of the asset depends on whether the sale price of the asset is lower or higher than the book value on the date of sale. The book value on the date of sale is computed by deducting depreciation of the asset from the purchase price. So, it's simple if the on-sale date book value is lower than the sale price it is a gain and if the book value is higher it is a loss.
Gain/Loss = Sale price - Book value on the date of sale
here,
Sale price = $26,000
Book value on date of sale = Purchase cost - Depreciation => $70,000 - $18000 = $58000
So,
Gain/Loss = $26000 - $58000 = $32000
As, the sale price is lower Lassen Corporation have a loss of $32000 from this transaction.
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