Question

concord corporation purchased a new machine on may 1, 2012 for $559200. at the time of acquisition, the machine was estimated to have a useful life of ten years and an estimated salvage value of $26400. the company has recorded monthly depreciation using the straight-line method. on march 1, 2021, the machine was sold for $71400. what schold be the loss regognized from the sale of the machine

Answer 1

Answer:

$17,160

Explanation:

According to the scenario, computation of the given data are as follows,

Purchase price = $559,200

Useful life = 10 years or 120 months

Salvage value = $26,400

Total time in months(May1,2012 - Mar1,2021) = 106 months

So, depreciation cost = ($559,200 - $26,400) ÷ 120 = $4,440 per month

So, total depreciation cost for 106 months = $4,440 × 106 = $470,640

Book value = Purchase price - depreciation

= $559,200 - $470,640

= $88,560

Hence, Loss = Book value - sold value

= $88,560 - $71,400

= $17,160