Ace Company buys a machine on April 1, Year One, for $50,000 in cash. It has a residual value of $10,000 and an expected useful life of ten years. The straight-line method and the half-year convention are applied. The asset is sold on September 1, Year Three, for $39,900. What loss should be reported on this sale? a. $100 loss b. $850 loss c. $1,767 loss d. $2,100 loss
Ace Company buys a machine on April 1, Year One, for $50,000 in cash. It has a residual value of $10,000 and an expected useful life of ten years. The straight-line method and the half-year convention are applied. The asset is sold on September 1, Year Three, for $39,900. What loss should be reported on this sale? a. $100 loss b. $850 loss c. $1,767 loss d. $2,100 loss
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter11: Depreciation, Depletion, Impairment, And Disposal
Section: Chapter Questions
Problem 2RE: Akron Incorporated purchased an asset at the beginning of Year 1 for 375,000. The estimated residual...
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Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
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| Ace Company buys a machine on April 1, Year One, for $50,000 in cash. It has a residual value of $10,000 and an expected useful life of ten years. The straight-line method and the half-year convention are applied. The asset is sold on September 1, Year Three, for $39,900. What loss should be reported on this sale? |
| a. $100 loss |
| b. $850 loss |
| c. $1,767 loss |
| d. $2,100 loss |
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