Ask Question
2 April, 19:36

Nicklaus company has decided to sell one of its old machines on june 30, 2013. the machine was purchased for $160,000 on january 1, 2009, and was depreciated on a straight-line basis for 10 years with no salvage value. if the machine was sold for $52,000, what was the amount of the gain or loss recorded at the time of the sale?

+1
Answers (1)
  1. 2 April, 19:55
    0
    Straight line depreciation (D) is computed as follows:

    D = (purchase cost of an asset - its expected salvage value) / the number of years of its expected useful life.

    In the case of the old machine sold by Nicklaus Company, depreciation (D) in dollars is:

    D = (160,000-0) / 10

    D = 160,000/10

    D = 16,000 per year

    Since the machine was bought on June 30, 2003, and was sold on January 1, 2009, its total depreciation value (TD) for the 6 and half years that it was used is:

    TD = 16,000 x 6.5

    TD = 104,000

    Cost of the asset on time of sale, therefore, is 160,000-104,000=56,000

    Since the company sold it at only $52,000, recorded loss will be $4,000 (56,000-52,000).
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “Nicklaus company has decided to sell one of its old machines on june 30, 2013. the machine was purchased for $160,000 on january 1, 2009, ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers