Ouyang Inc. sold a piece of machinery for $350,000 on Dec 31, 2013 and reported the...

Ouyang Inc. sold a piece of machinery for $350,000 on Dec 31, 2013 and reported the following information related to the machinery with a straight-line depreciation method used.

Acquisition cost: $500,000

Acquisition date: 1 Jan, 2013

Residual value: 100,000

Years of useful life: 4

The result of the sale is most likely:

a loss of $25,000

a loss of $50,000

a loss of $150,000

a gain of $50,000

a gain of $250,000

Solutions

Expert Solution



Cost of Acquisition		$ 500,000.00
Residual Value		$ 100,000.00
Useful life		4 years
Sale value		$ 350,000.00

Under straight line method , Depreciation = ( Cost of acquisition - Residual value ) / Useful life

	(500000-100000)/4
	$ 100,000.00

Therefore, Machinery as on 31/12/2013	500,000-100,000 = 4,00,000
Sale value	$ 350,000.00

Loss	$ (50,000.00)

ekkarill92 answered 1 year ago

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