A photocopy machine costs $99,000 when new and has accumulated depreciation of $92,000.Suppose the company junks this machine and receives nothing.What is the result of the disposal transaction?

Question

Quizplus · Accepted Answer

In this case, the accumulated depreciation is greater than the cost of the machine, which means that the machine has little or no value. Therefore, if the company junks the machine without receiving any payment, it will result in a loss. The loss is calculated by subtracting the accumulated depreciation from the cost of the machine: $99,000 - $92,000 = $7,000. Therefore, the answer is (D) loss of $7,000.

A Photocopy Machine Costs $99,000 When New and Has Accumulated