On January 1, 2017, Starch, Inc. purchased a machine for $120,000. Starch uses straight-line depreciation and estimates a seven-year useful life and a $4,500 salvage value. On December 31, 2023, Starch cannot locate a buyer for the used machine so it is scrapped.
In recording the machine retirement, Starch should reflect:

Question

Quizplus · Accepted Answer

($12,000 - $4,500) / 7 = $16,500 annual depreciation
$120,000 - (7 x $16,500) = $4,500 book value at disposal date = $4,500 loss on retirement