Bowie Company uses a calendar year and the straight line depreciation method

Accounting Nov 05, 2020

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.

Expert Solution

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

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