Question

A machine that cost $57,600 and on which $42,400 of depreciation had been recorded was disposed of for $16,320. Indicate whether a gain or loss should be recorded, and for what amount.

Assume that the machine of Part a, above, was instead discarded. Indicate whether a gain or loss should be recorded, and for what amount.

Assume that the machine of Part a, above, was instead sold for $15,040. Indicate whether a gain or loss should be recorded, and for what amount.

Answer 1

Case 1 :-

Machine cost = $57600

Recorded depreciation = $42400

Sold for $16320

Gain or loss = sale value - book value at the time of sale

Book value at the time of sale = cost - recorded depreciation

Book value at the time of sale = $57600 - $42400

Book value at the time of sale = $15200

Gain or loss = 16320 - 15200 = $1120

The gain on disposal of machine = $1120

Case 2 :-

In this case the machine is discarded :- it refers to the nation does not generate any revenue at the end.

Then loss of discarding the machine is equal to book value of the machine at the time of discarding.

Loss = cost - recorded depreciation

Loss = $57600 - $42400 = $15200

Loss should be recorded for $15200

Case 3 :-

In this case the machine is sold for $15040

Gain or loss = sale value - book value at the time of sale

Book value at the time of sale = cost - recorded depreciation

Book value at the time of sale = $57600 - $42400

Book value at the time of sale = $15200

Loss = $15040 - $15200 = 160

In this case, The loss to be recorded for $160

These are all the information required to solve the above given question.

if there is any clarification required regarding the above provided answer, please mention them in comment box.

I hope, all the above mentioned information and calculations are useful and helpful to you.

Thank you.