A business machine purchased April 10, 2017, for $98,000. On August 15, 2019, the machine was...

A business machine purchased April 10, 2017, for $98,000. On August 15, 2019, the machine was fully deprecated and sold for $67,000.

a) What is the amount of the gain or loss from the sale of the machine?

b) What is the nature/character of the gain or loss from the sale of the machine?

Solutions

Expert Solution

Original Cost of Asset $98,000

Less: Depreciation ($98,000)

-----------------

Net Book Value Nil

a) Sale Price is higher than net book value hence there is gain on sale of asset

Gain on sale of asset= Sale proceeds from sale asset – Net Book value

=$67,000-0

=$67,000

b) As it is gain sale of asset hence receipt is Capital receipt and gain is capital gain/ capital profit

jeff jeffy answered 1 year ago

Next > < Previous

Related Solutions

15.Baxter Bolts purchased a new machine for $98,000. Baxter Bolts acquired a loan at their bank...

15.Baxter Bolts purchased a new machine for $98,000. Baxter Bolts acquired a loan at their bank for the full amount of the purchase price at the rate of 6.90%(APR). Baxter Bolts ismaking monthly payments on the loanthat has a seven year term. Baxter Bolts has made each of the first 36 monthly payments at the end of the period and it is the beginning of the fourth year of theseven year term. How much interest will Baxter Bolts pay in...

Wildhorse Ltd. purchased a new machine on April 4, 2017, at a cost of $180,000. The...

Wildhorse Ltd. purchased a new machine on April 4, 2017, at a cost of $180,000. The company estimated that the machine would have a residual value of $18,000. The machine is expected to be used for 12,960 working hours during its four-year life. Actual machine usage was 1,300 hours in 2017; 1,900 hours in 2018; 2,500 hours in 2019; 1,900 hours in 2020; and 2,100 hours in 2021. Wildhorse has a December 31 year end. (a) Calculate depreciation for the...

Sheridan Ltd. purchased a new machine on April 4, 2017, at a cost of $164,000. The...

Sheridan Ltd. purchased a new machine on April 4, 2017, at a cost of $164,000. The company estimated that the machine would have a residual value of $16,000. The machine is expected to be used for 14,800 working hours during its four-year life. Actual machine usage was 1,400 hours in 2017; 2,100 hours in 2018; 2,400 hours in 2019; 2,300 hours in 2020; and 2,000 hours in 2021. Sheridan has a December 31 year end. Calculate depreciation for the machine...

On March 10, 2019, Sandhill Company sells equipment that it purchased for $232,320 on August 20,...

On March 10, 2019, Sandhill Company sells equipment that it purchased for $232,320 on August 20, 2012. It was originally estimated that the equipment would have a life of 12 years and a salvage value of $20,328 at the end of that time, and depreciation has been computed on that basis. The company uses the straight-line method of depreciation. Compute the depreciation charge on this equipment for 2012, for 2019, and the total charge for the period from 2013 to...

10. APEX Company purchased a machine on January 1, 2017, for $60,000. The machine was estimated...

10. APEX Company purchased a machine on January 1, 2017, for $60,000. The machine was estimated to have a service life of ten years with an estimated residual value of $6,000. APEX sold the machine on January 1, 2021 for $12,000. APEX 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.

A business machine purchased April 1, 2015, for $108,000 was fully depreciated in 2015 using §...

A business machine purchased April 1, 2015, for $108,000 was fully depreciated in 2015 using § 179 immediate expensing. On August 15, 2017, the machine was sold for $77,000. What is the amount and nature of the gain or loss from disposition of the machine?

Exercise 10-18 Pronghorn Company purchased an electric wax meter on April 30, 2017, by trading in...

Exercise 10-18 Pronghorn Company purchased an electric wax meter on April 30, 2017, by trading in its old gas model and paying the balance in cash. The following data relate to the purchase. List price of new meter $19,276 Cash paid 12,200 Cost of old meter (5-year life, $854 salvage value) 13,664 Accumulated Depreciation-old meter (straight-line) 7,686 Secondhand fair value of old meter 6,344 Prepare the journal entries necessary to record this exchange, assuming that the exchange (a) has commercial...

On April 15, 2017, Mary purchased $60,000 ABC Co.'s 12% 20-year bonds at face amount with...

On April 15, 2017, Mary purchased $60,000 ABC Co.'s 12% 20-year bonds at face amount with interest being paid on December 31 each year. ABC Co. has paid interest due on the bonds regularly. On April 15, 2021, market interest rated had risen 14% and Mary is considering selling. A) Calculate the market value of Mary's bonds on April 15, 2021

Exercise 11-15 On March 10, 2019, Flounder Company sells equipment that it purchased for $232,320 on...

Exercise 11-15 On March 10, 2019, Flounder Company sells equipment that it purchased for $232,320 on August 20, 2012. It was originally estimated that the equipment would have a life of 12 years and a salvage value of $20,328 at the end of that time, and depreciation has been computed on that basis. The company uses the straight-line method of depreciation. Compute the depreciation charge on this equipment for 2012, for 2019, and the total charge for the period from...

Jack Thyme opened Thyme Company, a veterinary business on August 1, 2017. On August 31, the...

Jack Thyme opened Thyme Company, a veterinary business on August 1, 2017. On August 31, the balance sheet showed Cash $9,000; Accounts Receivable $1,700; Supplies $600; Equipment $5,000; Accounts Payable $3,600; Common Stock $10,000; and Retained Earnings $2,700. During September, the following transactions occurred. Sept. 2 Paid $3,400 cash for accounts payable due. 5 Received $1,200 from customers in payment of accounts receivable. 8 Purchased additional office equipment for $5,100, paying $1,000 in cash and the balance on account. 13...

Subjects