Question

A company purchased equipment for $100,000 that is expected to have a useful life of 10...

A company purchased equipment for $100,000 that is expected to have a useful life of 10 years and no salvage value. The company sold the equipment at the end of the fourth year of its useful life, at which point it had fair market value of $90,000. If the asset was sold for $70,000 and was being depreciated using the straight line method as was reported at book value, what amount of gain or loss would be reported at the time of the sale?  

$20,000 gain

$10,000 gain

no gain or loss would be reported.

Homework Answers

Answer #1

The above image shows the depreciation schedule if the machine is depreciated using straight line method over its useful life of 10 years.

Now the machine is sold at the end of 4rth year when the balance after depreciation is 60000 Now if the asset is sold at 70000 then the profit is of 10000

Fair market value is not to be considered while calculating profit and loss as it is not relevant

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Rock Company purchased manufacturing equipment for $500,000 on April 1, 2012. The estimated salvage value is...
Rock Company purchased manufacturing equipment for $500,000 on April 1, 2012. The estimated salvage value is $50,000, and the estimated total useful life is 5 years. The straight-line method is used for depreciation. What is the gain or loss on sale if the asset was sold for $215,000 on May 1, 2015? a.   $75,000 gain b.   $15,000 gain c.   $ 7,500 gain d.   $ 7,500 loss
1. Equipment purhcased on Jan 1 2017: Intial Cost 50, 000 Expected Useful Life 5 years...
1. Equipment purhcased on Jan 1 2017: Intial Cost 50, 000 Expected Useful Life 5 years Expected Salvage Value 5, 000 a. record the depreciation expense for 2017 using the straight line method. assets liabilities stockholder's equity b. what is the book value of the equipment at december 1 2017 after deprecation has been recorded? c. the equipment sold for 40,000 on june 30, 2018. what is the book value of the equipment on the date of sale? (Need to...
Marks Consulting purchased equipment costing $45,000 on January 1, Year 1. The equipment is estimated to...
Marks Consulting purchased equipment costing $45,000 on January 1, Year 1. The equipment is estimated to have a salvage value of $5,000 and an estimated useful life of 8 years. Straight-line depreciation is used. If the equipment is sold on July 1, Year 5 for $20,000, the journal entry to record the sale will include a: Select one: a. Debit to accumulated depreciation for $22,500. b. Credit to loss on sale for $10,000. c. Credit to cash for $20,000. d....
On January 1, 2013, Jane received $52,000 for used equipment. The equipment was originally purchased on...
On January 1, 2013, Jane received $52,000 for used equipment. The equipment was originally purchased on January 1, 2009, and cost $80,000. Jane expected a useful life of 10 years and salvage value of $5,000. It was depreciated using the straight-line method. The journal entry to record the sale would include which of the following? Assume the machine was purchased on January 1, 2009 and depreciated using the straight-line method. Group of answer choices Loss of $9,500. Gain of $2,000....
ABC Company purchased equipment on January 1, 2009 for $70,000. It was estimated that the equipment...
ABC Company purchased equipment on January 1, 2009 for $70,000. It was estimated that the equipment would have a $5,000 salvage value at the end of its 4-year useful life. It was also estimated that the equipment would produce 100,000 units over its 4-year life. The company used the straight-line depreciation method. If 16,000 units of product were produced in 2009 and 24,000 units were produced in 2010, what was the book value of equipment at December 31, 2010?
Panola Company purchased equipment on 1/1/2019 for 980,000. The equipment has a 10 year useful life,...
Panola Company purchased equipment on 1/1/2019 for 980,000. The equipment has a 10 year useful life, and is depreciated straight-line. The residual value at the end of 10 years is 150,000. At the end of 2021 (but before the books of 2021 were closed) the company's accountant discovered that when calculating annual depreciation for the last three years (2019,2020, and 2021) a residual value of 50,000 was used by error (instead of the correct residual value of 150,000). The journal...
Use the following information for the next 5 questions: On January 1, 2008, KA Company purchased...
Use the following information for the next 5 questions: On January 1, 2008, KA Company purchased equipment for $105,000. The estimated useful life of the equipment is 10 years, during which time it will be produce 100,000 units. Estimated residual value is $5,000. KA’s fiscal year is January 1 to December 31. 46. If KA Company uses the straight-line method of depreciation, the net book value of the asset at the end of the second year will be: 47. If...
1.   Presto Company purchased equipment and these costs were incurred: Cash price $65,000 Sales taxes 3,600...
1.   Presto Company purchased equipment and these costs were incurred: Cash price $65,000 Sales taxes 3,600 Insurance during transit 640 Installation and testing  860 Total costs $70,100 Presto will record the acquisition cost of the equipment as a. $65,000. b. $68,600. c. $69,240. d. $70,100. 2. A company purchased factory equipment on April 1, 2015 for $160,000. It is estimated that the equipment will have a $20,000 salvage value at the end of its 10-year useful life. Using the straight-line method...
. Straight-line depreciation method: A unit of equipment is purchased for $100,000, which is expected to...
. Straight-line depreciation method: A unit of equipment is purchased for $100,000, which is expected to be used 2,000 hr/yr. The anticipated salvage value is $20,000 at the end of its 4-year useful life. Calculate the hourly depreciation costs using the straight-line depreciation method.
a company has purchased equipment whose first cost is $ 100,000 with an estimated life of...
a company has purchased equipment whose first cost is $ 100,000 with an estimated life of eight years.the estimated salvage value of the equipment at the end of its lifetime is $ 20,000 determine the depreciation charge and book value at the end of various years using sinking fund method of depreciation with an interest rate of %12 compounded annually
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT