Adelphi Company purchased a machine on January 1, 2017, for $70,000. The machine was estimated to...
Adelphi Company purchased a machine on January 1, 2017, for $70,000. The machine was estimated to have a service life of ten years with an estimated residual value of $5,000. Adelphi sold the machine on January 1, 2021 for $23,000. Adelphi 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.
Homework Answers
| Calculation of Gain/ Loss on sale | |
| Sales Consideration= | $23,000 |
| Less: Written down value on 1st January 2021 | 18000 |
| Profit on sale of machinery | 5000 |
Notes:
| Depreciation under Double declining Method per year= | (Cost of machine-Salvage value)/ Life of machine)*2 | |||||
| ($ 70000-5000)/10)*2 | ||||||
| 13000 per year | ||||||
| Written down value on 1st January 2021 | ||||||
| Cost value on 1st January 2017 | $ 70000 | |||||
| Less ( Depreciation for 4 years) (13000*4) | 52000 | |||||
| Written down value on 1st January 2021 | 18000 | |||||
| Under double declining method depreciation is chargedouble the rate straight line method |
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