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Homework answers / question archive / Bowie Company uses a calendar year and the straight line depreciation method
Bowie Company uses a calendar year and the straight line depreciation method. On December 31, 2018, after adjusting entries were posted, Bowie Company sold a machine which was originally purchased on January 1, 2015. The historical cost was $21,500, the salvage value assumed was $2,000 and the original estimated life was five years.. It was sold for $6,000 cash. Using this information, how much should be recorded on December 31 for the Gain or (Loss)? Round to whole dollars.
| Answer |
| Depreciation expense per year = (21500-2000)/5 |
| 3900 per year |
| Accumulated Depreciation = 3900 * 4 = 15600 |
| Book value = 21,500 - 15,600 = 5900 |
| Gain (Loss) = 6000 - 5900 |
| 100 Gain |
