On July 1, 2021, Fleming Company sells machinery for $240,000.The machinery originally cost $600,000, had an estimated 5-year life and an expected salvage value of $100,000.The Accumulated Depreciation account had a balance of $350,000 on January 1, 2021 using the straight-line method.The gain or loss on disposal is
A)$40,000 gain.
B)$10,000 loss.
C)$20,000 loss.
D)$10,000 gain.

Question

Quizplus · Accepted Answer

The book value of the machinery on July 1, 2021, is $600,000 - $350,000 - ($100,000 depreciation for half a year) = $250,000. Selling it for $240,000 results in a $10,000 loss.

On July 1, 2021, Fleming Company Sells Machinery for $240,000