Question

Metlock Manufacturing purchased machinery for $910000 on January 1, 2017. Straight-line depreciation has been recorded based on a $59500 salvage value and a 5-year useful life. The machinery was sold on May 1, 2021 at a gain of $13000. How much cash did Metlock receive from the sale of the machinery?

Answer 1

Working Notes : 1
	CALCULATION OF THE DEPRECIATION AS PER STRAIGHT LINE METHOD FOR MACHINE
	Purchase Cost of Machine	$                  9,10,000
	Less: Salvage Value	$                      59,500
	Net Value for Depreciation (A)	$                  8,50,500
	Usefule life of the Assets(B)	5	Years
	Depreciation per year = (A/B)	1,70,100
	Total Depreciation Per year =	$                  1,70,100
Working Notes : 2
	CALCULATION OF BOOK VALUE OF THE ASSETS AS ON MAY 01, 2021
	Year	Depreciation Expenses	Cost	Accumulation Depreciation	Book Value
	At Acquisition		$                 9,10,000		$                        9,10,000
	Depreciation for Year 2017	$                  1,70,100		$          1,70,100	$                        7,39,900
	Depreciation for Year 2018	$                  1,70,100		$          3,40,200	$                        5,69,800
	Depreciation for Year 2019	$                  1,70,100		$          5,10,300	$                        3,99,700
	Depreciation for Year 2020	$                  1,70,100		$          6,80,400	$                        2,29,600
	Depreciation for Year 2021 ($ 170,100 x 4 Month/ 12 Month)	$                      56,700		$          7,37,100	$                        1,72,900
Solution:
	Calculation of Cash Collected from sale of machinary
	Book Value of the assets as on May 01, 2021	1,72,900
	Add: Gain on Sale of Machinary	13,000
	Cash Collected	1,85,900
Answer - Cash received = $ 185,900