Question

On June 1, 2021, XYZ Company paid $150,000 to purchase equipment. The
equipment was assigned a useful life of 15 years and a $6,000 residual
value. The equipment will be depreciated using the straight-line method.

On November 1, 2027, XYZ Company sold the equipment for $72,100 cash.

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

Answer 1

Depreciation each year under Straight-line method = (Cost - Residual value) / Estimated useful life

= ($150,000 - $6,000) / 15

= $9,600

	Depreciation
2021	$5,600 ($9,600*7/12)
2022	$9,600
2023	$9,600
2024	$9,600
2025	$9,600
2026	$9,600
2027	$8,000 ($9,600*10/12)
	$61,600

Accumulated depreciation on November 1, 2027 = $61,600

Cash	$72,100
Accumulated depreciation	$61,600
Loss on sale	$16,300
Equipment		$150,000

Loss on sale = $16,300