Nicklaus Company has decided to sell one of its old machines on June 30, 2015. The machine was purchased for $200,000 on January 1, 2011, and was depreciated on a straight-line basis for 10 years with no salvage value. If the machine was sold for $65,000, what was the amount of the gain or loss recorded at the time of the sale?
A)$45,000.
B)$135,000.
C)$55,000.
D)$115,000.

Question

Quizplus · Accepted Answer

The machine's annual depreciation is $20,000 ($200,000/10 years). By June 30, 2015, 4.5 years of depreciation have occurred, totaling $90,000. The book value at the time of sale is $110,000 ($200,000 - $90,000). Selling it for $65,000 results in a loss of $45,000 ($110,000 - $65,000).

Nicklaus Company Has Decided to Sell One of Its Old