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Bowie Company uses a calendar year and the straight line depreciation method. On December 31, 2018,...

Bowie Company uses a calendar year and the straight line depreciation method. On December 31, 2018, after adjusting entries were posted, Bowie Company sold a machine which was originally purchased on January 1, 2015. The historical cost was $23,500, the salvage value assumed was $2,000 and the original estimated life was five years.. It was sold for $3,200 cash. Using this information, how much should be recorded on December 31 for the Gain or (Loss)? Round to whole dollars.

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Expert Solution

Straight-line Method

Annual Depreciation = ( Cost - Salvage Value ) /Life in years = ( 23,500-2000) /5 = $4,300

Depreciation up to Decment 31,2018 = 4,300 *4 = 17,200

Book value on Decm 31 2018 = 23500-17200 = 6,300

Loss on sale pf Assets = 6,300-3,200 = $3,100 (loss) (Answer)

ekkarill92 answered 2 years ago
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