Question

Bonita Industries purchased machinery for $1030000 on January 1, 2017. Straight-line depreciation has been recorded based on a $82000 salvage value and a 5-year useful life. The machinery was sold on May 1, 2021 at a gain of $27500. How much cash did Bonita receive from the sale of the machinery?

a. $138,000
b. $162,000
c. $198,000
d. $258,000

Answer 1

$235,900

Step-by-step explanation:

Depreciation p.a. = ($1030000 - $82,000) / 5 years

Depreciation p.a. = $189,600

Depreciation charged till the Jan 1 ,2021 (4 years)

= $189,600 * 4 years

= $758,400

Depreciation charged till May 1, 2021 (4 month)

= $189,600 * 4 months/12 months

= $63,200

Value of the asset = $1030000 - $758,400 - $63,200

Value of the asset = $208,400

Cash received from sale of machinery = $208,400 + $27,500 (gain)

Cash received from sale of machinery = $235,900