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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 = 2*100%/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 3 years ago
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