On January 1, 2017, Cornie, Inc. purchased a machine for $111,600. Cornie uses straight-line depreciation and estimates an eight-year useful life and a $3,600 salvage value. On December 31, 2024, Cornie cannot locate a buyer for the used machine so it is scrapped.
In recording the machine retirement, Cornie should reflect:
A) No gain or loss
B) A $ 3,600 gain
C) A $ 3,600 loss
D) A $86,400 loss

Question

Quizplus · Accepted Answer

($111,600 - $3,600) / 8 = $13,500 annual depreciation
$111,600 - (8 x $13,500) = $3,600 book value at disposal date
= $3,600 loss on retirement