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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 $21,500, the salvage value assumed was $1,500 and the original estimated life was five years.. It was sold for $5,400 cash. Using this information, how much should be recorded on December 31 for the Gain or (Loss)? Round to whole dollars.

Solutions

Expert Solution

Depreciation expense per year = (21500-1500)/5

= 4,000 per year

Accumulated Depreciation = 4,000 * 4 = 16,000

Book value = 21,500 - 16,000 = 5500

Gain (Loss) = 5400 - 5500

= (100) loss

ekkarill92 answered 2 years ago
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