On January 1, 2020, Universal Manufacturing purchased a machine for $950,000 that it expected to have a useful life of four years. The company estimated that the residual value of the machine was $70,000. Universal Manufacturing used the machine for two years and sold it on January 1, 2022, for $240,000. As of December 31, 2021, the accumulated depreciation on the machine was $440,000. Read the requirements. C 1. Calculate the gain or loss on the sale of the machinery. (Use a minus sign or parentheses for a loss.) Gain or (loss) on the sale of the machinery Requirements 1. Calculate the gain or loss on the sale of the machinery. 2. Record the sale of the machine on January 1, 2022. - X
On January 1, 2020, Universal Manufacturing purchased a machine for $950,000 that it expected to have a useful life of four years. The company estimated that the residual value of the machine was $70,000. Universal Manufacturing used the machine for two years and sold it on January 1, 2022, for $240,000. As of December 31, 2021, the accumulated depreciation on the machine was $440,000. Read the requirements. C 1. Calculate the gain or loss on the sale of the machinery. (Use a minus sign or parentheses for a loss.) Gain or (loss) on the sale of the machinery Requirements 1. Calculate the gain or loss on the sale of the machinery. 2. Record the sale of the machine on January 1, 2022. - X
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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.
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Transcribed Image Text:On January 1, 2020, Universal Manufacturing purchased a machine for $950,000 that it expected to have a useful life of four years. The company estimated that the
residual value of the machine was $70,000. Universal Manufacturing used the machine for two years and sold it on January 1, 2022, for $240,000. As of December 31,
2021, the accumulated depreciation on the machine was $440,000.
Read the requirements.
G
1. Calculate the gain or loss on the sale of the machinery. (Use a minus sign or parentheses for a loss.)
Gain or (loss) on the
sale of the machinery
Requirements
1. Calculate the gain or loss on the sale of the machinery.
2. Record the sale of the machine on January 1, 2022.
Print
Done
- X
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