Nuts-R-Us, Inc. purchased nut-shelling equipment at a total cost of $80,000. The equipment was depreciated by using MACRS with a recovery class of 3 years and an anticipated end-of-useful-life value of $8000. The company has decided the equipment is no longer needed after two years and wishes to determine the minimum value it can accept for the equipment (that is, the lowest value that will result in no loss on the sale). Find the minimum selling price for the equipment.
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
Nuts-R-Us, Inc. purchased nut-shelling equipment at a total cost of $80,000. The equipment was
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