Question

Question 11 View Policies Current Attempt in Progress ma 553400 salvage value and a 5-year useful ide. The machinery was sold on May 1, 2018 at a pinof $17400 Bonita Industries purchased machinery for $894000 on January 1, 2014 Straight line depreciation has been recorded base How much cash did Bonita receive from the sale of the machinery?

Answer 1

SOLUTION : 1
	CALCULATION OF THE DEPRECIATION AS PER STRAIGHT LINE METHOD FOR MACHINE
	Purchase Cost of Machine	$                  8,94,000
	Less: Salvage Value	$                      53,400
	Net Value for Depreciation	$                  8,40,600
	Usefule life of the Assets	5 years
	Depreciation per year = Value for Depreciation / 5 years =	$                  1,68,120
	Total Depreciation Per year =	$                  1,68,120
	CALCULATION OF BOOK VALUE OF MACHINE AND CASH COLLECTED
	Purchase Cost	$                  8,94,000
	Less: Depreciation for the year 2014	$                  1,68,120
	Less: Depreciation for the year 2015	$                  1,68,120
	Less: Depreciation for the year 2016	$                  1,68,120
	Less: Depreciation for the year 2017	$                  1,68,120
	Less: Depreciation upto May 01, 2018 = for 4 months	$                      56,040
	Book Value	$                  1,65,480
	Add: Gain on sale of Machine	$                      17,400
	Total Cash Receipt	$                  1,82,880
	Answer = $ 182,880
SOLUTION : 2
	CALCULATION OF THE COST OF EQUIPMENT
	Purhcase Cost	$                      40,000
	Add: Sales Tax	$                        2,400
	Freight Charges	$                            540
	Installation cost	$                            665
	Total Cost	$                      43,605
	Answer = Option 3 = $ 43,605