Adelphi Company purchased a machine on January 1, 2017, for $100,000. The machine was estimated to have...

Adelphi Company purchased a machine on January 1, 2017, for $100,000. The machine was estimated to have a service life of ten years with an estimated residual value of $5,000. Adelphi sold the machine on January 1, 2021 for $23,000. Adelphi uses the double declining method for depreciation. Using this information, how much is the gain or (loss) for the equipment sale entry made on January 1, 2021. Enter a loss as a negative number.

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Expert Solution

Calculation of gain or loss on sale of equipment:

Life	10 Years
Double decling balance method rate = 2100%/10*	20%
Particulars	2017	2018	2019	2020
Opening Balance	1,00,000.00	80,000.00	64,000.00	51,200.00
Depreciation at 20%	20,000.00	16,000.00	12,800.00	10,240.00
Closing balance	80,000.00	64,000.00	51,200.00	40,960.00

Opening value of equipment on January 1, 2021= $40960
Loss= selling price- beginning valu= 23000-40960= -17960

So loss on sale of equipment= -$17960

ekkarill92 answered 1 year ago

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