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Adelphi Company purchased a machine on January 1, 2017, for $100,000. The machine was estimated to...

Adelphi Company purchased a machine on January 1, 2017, for $100,000. 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 $20,000. 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.

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Answer #1
Loss on sale -20960
Workings:
Double declining rate 20% =1/10*2
Depreciation for 2017 20000 =100000*20%
Depreciation for 2018 16000 =(100000-20000)*20%
Depreciation for 2019 12800 =(100000-20000-16000)*20%
Depreciation for 2020 10240 =(100000-20000-16000-12800)*20%
Total Depreciation 59040
Cost of Equipment 100000
Less: Accumulated Depreciation 59040
Book value of Equipment sold 40960
Book value of Equipment sold 40960
Less: Sales value 20000
Loss on sale -20960
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