On January 1, 2017, Extensive Manufacturing purchased a machine for $580,000 that it expected to have a useful life of four years. The company estimated that the residual value of the machine was $100,000. Extensive Manufacturing used the machine for two years and sold it on January 1, 2019, for $260,000. As of December 31, 2018, the accumulated depreciation on the machine was $240,000. Read the requirements. 1. Calculate the gain or loss on the sale of the machinery. Extensive Manufacturing will record a loss of $ 80,000 on the sale of the machinery. 2. Record the sale of the machine on January 1, 2019. (Record debits first, then credits. Exclude explanations from any journal entries.) Journal Entry Date 2019 Jan 1 Accounts Cash Accumulated Depreciation. Loss on Sale of Machinery Machinery i Requirements 1. Calculate the gain or loss on the sale of the machinery. 2. Record the sale of the machine on January 1, 2019. Debit Credit

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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.