Final answer:
The Devine Company realized a gain of $1,000 from the sale of a machine that had a book value of $7,000 and was sold for $8,000. The correct answer is not listed in the student's options, however, if one must be chosen, it would be a loss of $5,000 as the closest incorrect alternative.
Step-by-step explanation:
The student asked how to determine whether Devine Company had a gain or loss after selling a machine and how to calculate the amount.
To solve this, we take the original cost of the machine, subtract the accumulated depreciation to find the machine's book value, and then compare it to the selling price.
In this case, the original cost was $34,000 and the accumulated depreciation was $27,000.
Therefore, the book value of the machine was $34,000 - $27,000 = $7,000. The machine was sold for $8,000, so the gain on the sale is the selling price minus the book value: $8,000 - $7,000 = $1,000.
Hence, Devine Company had a gain of $1,000, not the options provided. However, if we were to choose the closest correct option from the ones given, the answer would be a loss of $5,000, as it corresponds to the reverse transaction (buying a machine for $8,000 and having a book value of $7,000).
The complete question is:content loaded
Devine company sold a machine for $8,000 that originally cost $34,000 and had accumulated depreciation of $27,000. Devine had a:
1) gain of $5,000
2) loss of $5,000
3) gain of $19,000
4) loss of $19,000