Question

THE Company purchased a new machine on June 1, 2021
for $164,000. The machine was assigned a salvage 
value of $8,000 and an expected life of 20 years.
The straight-line depreciation method will be used
to calculate depreciation on the machine. 

On September 30, 2029, the machine was sold for
$26,000 cash.

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

Answer 1

Answer: $73,000

.

.

Annual depreciation under straight-line method = (Cost - Salvage value) / Useful life

= ($164,000 - $8,000) / 20

= $7,800 -->for 12 months

.

Depreciation for the year 2021 (From June 01, 2021 to Dec. 31, 2021 = $7,800 x (7 months / 12 months) = $4,550

Total depreciatioin from the year 2022 to the year 2028 (7 years) = $7,800 x 7 = $54,600

Depreciation for the year 2029 (From Jan. 01, 2029 to Sept.. 30, 2029 = $7,800 x (9 months / 12 months) = $5,850

Total accumulated deprecition until sale = $4,550 + $54,600 + $5,850 = $65,000

.

Book value of the asset = Cost - Accumulated depreciation = $164,000 - $65,000 = $99,000

.

Loss on sale = Book value - Sale value = $99,000 - $26,000 = $73,000