Raine Company has a machine that originally cost $170,000. Depreciation has been recorded for five years using the straight-line method, with a $12,500 estimated salvage value at the end of an expected nine-year life. After recording depreciation at the end of the fifth year, Raine sells the machine. a. Calculate the book value of the machine at the end of five years. $ (Answer)
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.
Sale of Machinery
Raine Company has a machine that originally cost $170,000.
After recording depreciation at the end of the fifth year, Raine sells the machine.
a. Calculate the book value of the machine at the end of five years. $ (Answer)
b. Calculate the gain/loss on the sale of the machine for:
i. $92,500 cash. $ (Answer)
ii. $82,500 cash. $ ( Answer)
iii. $70,000 cash. $ (Answer)
Enter losses using negative numbers.
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