Question

Marigold Corp. purchased a new machine on May 1, 2012 for $558000. At the time of acquisition, the machine was estimated to have a useful life of ten years and an estimated salvage value of $22800. The company has recorded monthly depreciation using the straight-line method. On March 1, 2021, the machine was sold for $71400. What should be the loss recognized from the sale of the machine

Answer 1

Answer:

$18,300 loss

Explanation:

Profit or Loss on sale of an asset is calculated in the asset`s disposal account. Simply stated, Profit or Loss on sale is Cash Receipt from sale less Carrying Amount of an asset.

where,

Accumulated depreciation = $428,160 + 40,140 = $468,300

Carrying Amount = $558000 - $468,300 = $89,700

therefore

Profit or Loss on sale = $71400 - $89,700 = $18,300 loss