Question

Adelphi Company purchased a machine on January 1, 2017, for $70,000. The machine was estimated to have a service life of ten years with an estimated residual value of $5,000. Adelphi sold the machine on January 1, 2021 for $21,000. Adelphi uses the double declining method for depreciation. Using this information, how much is the gain or (loss) for the equipment sale entry made on January 1, 2021. Enter a loss as a negative number.

Answer 1

double declining depreciation

= 100%/ useful years * 2

=100/10 *2

=10*2

=20%

year	book value	depreciation	ending book value
2017	70000	14000$[70000*20%]	56000[70000-14000]
2018	56000	11200[56000*20%]	44800[56000-11200]
2019	44800	8960[44800*20%]	35840[44800-8960]
2020	35840	7168[35840*20%]	28672[35840-7168]
	Accumulated depreciation upto January 2021	41328

book value on January 1 2021 is 28672$. if its sold for 21000$ there is a loss of [28672-21000] 7672$

	account	debit	credit
January 1 2021	accumulated depreciation	41328$
	Loss on equipment sale	7672$
	cash	21000$
	equipment		70000$