Question

Mason Company purchased a new machine on January 1, 2022
for $57,000. At the time of acquisition, the machine was
estimated to have a service life of ten years and a
residual value of $3,000. The company employs the
double-declining balance depreciation method.

The machine was sold on December 31, 2024 for $14,300
cash.

Calculate the amount of the loss recorded on the sale.
Do not enter your answer with a minus sign in front of
the number.

Answer 1

Solution:

In the Double declining method we do not consider Salvage value for calculation of depreciation.

Depreciation expense in 2022 = (57000/10) x 2 = 11,400

Depreciation expense in 2023 = (57000 - 11400) x (2/10) = 9,120

Depreciation expense in 2024 = (57000 - 11400 - 9120) x (2/10) = 7,296

Cost = 57,000

Purchase Cost	57,000
Less :Accumulated depreciation (11400+9120+7296)	(27,816)
Book value (57000-27816)	29,184
Less :Sales value	14,300
Loss (29184-14300)	14,884

Loss = 14,884