Question

on December 1, Dale decided to sell his old skate-sharpening machine for $8,000 cash. The store...

on December 1, Dale decided to sell his old skate-sharpening machine for $8,000 cash. The store purchased this skate sharpening equipment on January 1, 2018, and paid $14,000. The equipment was deemed to have a 4-year useful life and a $2,000 salvage value. Dale chose to depreciate the equipment straight line over 4 years. The depreciation for the 2019 fiscal year has not yet been recorded

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Answer #1

Purchase price of machine = $14000

Useful life = 4 years

Salvage value = $2000

Depreciation per year = ($14000 - $2000)/4

= $12000/4 = $3000

Depreciation for 11 months for 2019 = $3000/12 *11 = $2750

Total Depreciation charged on machine =

Depreciation for 2018 + Depreciation for 2019

$3000 + $2750 = $5750

Book value of machine as on December 1, 2019 =

Purchase price - Total Depreciation

= $14000 - $5750 = $8250

Sale value of machine = $8000

Loss on sale of machine = Book value - Sale value

= $8250 - $8000 = $250

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