On January 1, 2015, Cobb, Inc. purchased a machine for $40,000. Cobb uses straight-line depreciation and estimates a seven-year useful life and a $1,500 salvage value. On December 31, 2021, Cobb cannot locate a buyer for the used machine so it is scrapped.
In recording the machine retirement, Cobb should reflect:

Question

Quizplus · Accepted Answer

The machine is fully depreciated by the end of 2021, with a book value equal to the salvage value of $1,500. Since it is scrapped with no proceeds, the loss is equal to the salvage value.