The company bought a machine for $40, 000 in January year 1. The machine had an expected useful life of six years and an expected residual value of $10,000. The machine was depreciated on the straight line basis where a full year's charge is made in the year of purchase and none in the year of sale. In December year 4, the machine was sold for $ 15,000. The company has a policy in its internal accounts of combining the depreciation charge with the profit or loss on disposal of assets. Its year end is 31 December. What is the total amount of profit/loss charged to the statement of profit or loss over the life of the machine?
The company bought a machine for $40, 000 in January year 1. The machine had an expected useful life of six years and an expected residual value of $10,000. The machine was depreciated on the straight line basis where a full year's charge is made in the year of purchase and none in the year of sale. In December year 4, the machine was sold for $ 15,000. The company has a policy in its internal accounts of combining the depreciation charge with the profit or loss on disposal of assets. Its year end is 31 December. What is the total amount of profit/loss charged to the statement of profit or loss over the life of the machine?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
The company bought a machine for $40, 000 in January year 1. The machine had an expected useful life of six years and an expected residual value of $10,000. The machine was depreciated on the straight line basis where a full year's charge is made in the year of purchase and none in the year of sale. In December year 4, the machine was sold for $ 15,000. The company has a policy in its internal accounts of combining the depreciation charge with the profit or loss on disposal of assets. Its year end is 31 December. What is the total amount of profit/loss charged to the statement of profit or loss over the life of the machine?
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 3 steps with 2 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education