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Orton corporation, which has a calendar year accounting period, purchased a new machine for $80,000 on april 1, 2013. at that time orton expected to use the machine for nine years and then sell it for $8,000. the machine was sold for $44,000 on sept. 30, 2018. assuming straight-line depreciation, no depreciation in the year of acquisition, and a full year of depreciation in the year of retirement, the gain to be recognized at the time of sale would be

User ADmad
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1 Answer

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The answer in this question is $4,000. The solution to get the $4,000 answer is $80,000 – [($80,000 – $8,000) ÷ 9 × 5] = $40,000 (BV)
$44,000 – $40,000 = $4,000 (gain)
We have a $4,000 gain to be recognized at the time of the sale.
User Mwarren
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