On January 1, 2019, Lopez Company purchased a machine for $23,400. Lopez uses straight-line depreciation and estimates an eight-year useful life and an $1,800 salvage value. On December 31, 2022, Lopez sells the machine for $14,000.
In recording this sale, Lopez should reflect:

Question

Quizplus · Accepted Answer

The machine's cost is $23,400, with a salvage value of $1,800, resulting in a depreciable base of $21,600. Over an 8-year life, annual depreciation is $2,700 ($21,600 / 8). After 4 years (by the end of 2022), accumulated depreciation is $10,800 ($2,700 * 4). The book value at the time of sale is $12,600 ($23,400 - $10,800). Selling the machine for $14,000 results in a $1,400 gain ($14,000 - $12,600).

On January 1, 2019, Lopez Company Purchased a Machine for $23,400