Adelphi Company purchased a machine on January 1, 2017, for
$50,000. The machine was estimated to...
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Adelphi Company purchased a machine on January 1, 2017, for$50,000. The machine was estimated to have a service life of tenyears with an estimated residual value of $5,000. Adelphi sold themachine on January 1, 2021 for $24,000. Adelphi uses the doubledeclining method for depreciation. Using this information, how muchis the gain or (loss) for the equipment sale entry made on January1, 2021. Enter a loss as a negative number.
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3.9 Ratings (573 Votes)
Cost
$ 50,000.00
Accumulated depreciation
$ 29,520.00
Book
value
$ 20,480.00
Sales
price
$ 24,000.00
Book value
$ 20,480.00
Gain /(loss)
$
3,520.00
Gain on sale = $3,520
.
Working
Double declining Method
A
Cost
$ 50,000.00
B
Residual Value
$
5,000.00
C=A - B
Depreciable base
$ 45,000.00
D
Life [in
years]
10
E=C/D
Annual
SLM depreciation
$
4,500.00
F=E/C
SLM
Rate
10.00%
G=F x 2
DDB Rate
20.00%
Year
Beginning Book Value
Depreciation rate
Depreciation expense
Ending Book Value
Accumulated Depreciation
2017
$ 50,000.00
20.00%
$ 10,000.00
$ 40,000.00
$ 10,000.00
2018
$ 40,000.00
20.00%
$ 8,000.00
$ 32,000.00
$ 18,000.00
2019
$ 32,000.00
20.00%
$ 6,400.00
$ 25,600.00
$ 24,400.00
2020
$ 25,600.00
20.00%
$ 5,120.00
$ 20,480.00
$ 29,520.00
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