the following information pertains to machine A purchased by Axa incorporation.
original cost $30000
residual value $3000
estimated life 5 years
Accumulated depreciation (bases on a straight-line depreciation) $21600(4years)
machine A was sold on January 1 for $9000.while preparing the journal entry for disposal of the loss /gain on sale of equipment will be recorded at what amount?
a. loss on sale of equipment $600
b. gain on sale of equipment $600
c. loss on sale of equipment $30,00
d. loss on sale of equipment $21,600
Answers
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Given : machine A purchased by Axa incorporation.
original cost $30000
residual value $3000
estimated life 5 years
Accumulated depreciation (bases on a straight-line depreciation) $21600( 4years)
machine A was sold on January 1 for $9000
To Find : .
a. loss on sale of equipment $600
b. gain on sale of equipment $600
c. loss on sale of equipment $30,00
d. loss on sale of equipment $21,600
Solution:
original cost $30000
residual value $3000
estimated life 5 years
Depreciation in 5 years = 30000 - 3000 = $ 27000
Depreciation per year = 27000 /5 = $ 5400
Depreciation in 4 years = 5400 * 4 = 21600 $
Remaining value = 30000 - 21600 = 8400$
Sold for = 9000 $
Profit / Gain = 9000 - 8400 = 600 $
gain on sale of equipment $600
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