Nicklaus Company has decided to sell one of its old machines on June 30 2017. The machine was purchased for $200000 on January 1 2013 and was depreciated on a straight-line basis for 10 years with no salvage value. If the machine was sold for $65000 what was the amount of the gain or loss recorded at the time of the sale?
A) $45000.
B) $135000.
C) $55000.
D) $115000.

Question

Quizplus · Accepted Answer

The machine's annual depreciation is $200,000 / 10 years = $20,000. By June 30, 2017, 4.5 years of depreciation have accumulated, totaling $20,000 * 4.5 = $90,000. The book value of the machine at the time of sale is $200,000 (cost) - $90,000 (accumulated depreciation) = $110,000. The sale price is $65,000, so the loss on sale is $110,000 (book value) - $65,000 (sale price) = $45,000.

Nicklaus Company Has Decided to Sell One of Its Old