Answered

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On January 1, 2015, Danville Corporation acquired a machine at a cost of $60,000. The machine's service life was estimated to be ten years and its residual value to be $6,000. The straight-line method was used for depreciation. On January 1, 2020, the machine was no longer useful and was sold for $3,000. For 2020, in regard to this machine, how much of a loss should Danville record

Sagot :

facundobuzzetti

Answer:

Loss= $30,000

Explanation:

First, we need to calculate the annual depreciation and the accumulated depreciation at the moment of the sale:

Annual depreciation= (original cost - salvage value)/estimated life (years)

Annual depreciation= (60,000 - 6,000) / 10

Annual depreciation= $5,400

Accumulated depreciation= 5,400*5= $27,000

Now, the book value and loss from the sale:

Book value= 60,000 - 27,000= $33,000

Loss= selling price - book value

Loss= 33,000 - 3,000

Loss= $30,000

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