On December 31, 2021, Trixie Company sold a machine to another entity and simultaneously leased it back for one year. Pertinent information at this date follows: Sale Price-3,600,000, Carrying Amount-3,300,000, Present value of reasonable rentals-341,000, Estimated remaining useful life of machine-12 years. What amount of revenue from sale of the machine should be reported in 2021?
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.
On December 31, 2021, Trixie Company sold a machine to another entity and simultaneously leased it back for one year. Pertinent information at this date follows: Sale Price-3,600,000, Carrying Amount-3,300,000, Present value of reasonable rentals-341,000, Estimated remaining useful life of machine-12 years. What amount of revenue from sale of the machine should be reported in 2021?
341,000
300,000
41,000
0
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