Question

Ahrens Industries purchased a machine for $352,000. At that time, the machine had an estimated 10-year useful life and $16,000 salvage value. Ahrens has recorded monthly straight-line depreciation on the machine. Ahrens sold the machine on March 1, 2020 for $48,000. How much loss should Ahrens recognize on the sale?

Answer 1

There is no loss on disposal , instead a gain of $32,000

Step-by-step explanation:

Depreciable Value = Cost of the asset - salvage value

= $352,000-$16,000

=$336,000

Annual Depreciation =$336,000/10

=$33,600

Carrying Value as at March 1 ,2020 = $352,000-( $33,600*10)

=$16,000

Gain on disposal =$48,000- $16,000

= $32,000