Question

On January 1, 2020, ABC Company purchased a new machine
for $137,000. The machine was assigned a salvage value of
$7,320 and an expected life of 20 years. ABC Company
will use the double-declining balance method to calculate
depreciation on the machine. 

On December 31, 2022, the machine was sold for $29,000 cash.

Calculate the amount of the loss recorded on the sale.

Answer 1

Answer: $70,873 loss

Calculations:

Depreciation rate = 1/20 years x 2 = 0.05 x 2 = 0.10 or 10 %

Depreciation Schedule - Double declining [Partial]
Year	Beginning book value	x	Depreciation Rate	=	Depreciation Expense	Ending book value
2020	$137,000	x	10%	=	$13,700	$123,300
2021	$123,300	x	10%	=	$12,330	$110,970
2022	$110,970	x	10%	=	$11,097	$99,873

.

Book value at Dec 31,2022	$99,873
Cash received on sales	($29,000)
Los on sale	$70,873