Business, 04.04.2020 04:27 noeminm105

Rayya Co. purchases a machine for $176,400 on January 1, 2019. Straight-line depreciation is taken each year for four years assuming a seven-year life and no salvage value. The machine is sold on July 1, 2023, during its fifth year of service. Prepare entries to record the partial year’s depreciation on July 1, 2023, and to record the sale under each seperate situation. (1) The machine is sold for $75,600 cash. (2) The machine is sold for $60,480 cash.

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Answer from: shadowangel84

Refer explanation

Explanation:

A. Straight-line depreciation is whereby the same amount is depreciated every year throughout the life of the asset. It is calculated as:

(Cost of asset - Salvage Value) / Estimated total number of life years of asset.

The depreciation per year for the machine would be: ($176400 - 0) / 7

= $25,200

Depreciation for partial year’s depreciation as at 01 July 2023 = $25,200 / 2 = $12,600

Debit : Depreciation account : $12600

Credit : Accumulated depreciation account : $12600

B. In order to account for sale, it should be identified whether it is a profit on sale or loss on sale. This is calculated by comparing the net book value of the asset at the time of sale, and it’s sale price. If the sale price is higher than the NBV, it is a profit on sale. If the sale price is lower than the NBV, it is a loss on sale. Net book value is calculated as cost of asset - accumulated depreciation.

If the asset was purchased on January 01 2019 and sold on July 01 2023, it was used for 4.5 years. Hence, the accumulated depreciation of the asset is $25200 x 4.5 = $113400.

NBV = $176400 - $113400 = $63000

(B1) Machine is sold for $75600

Profit on sale : $75600 - $63000 = $12600

Debit : Cash : $75600

Debit : Accumulated depreciation : $113400

Credit : Profit on sale of asset : $12600

Credit : Machinery Account : $176400

(B2) Machine is sold for $60480

Loss on sale : $60480 - $63000 = $2520

Debit : Cash : $60480

Debit : Loss on sale of asset : $2520

Debit : Accumulated depreciation :$113400

Credit : Machinery Account : $176400

Answer from: Quest

almost done 23 out of 25

Answer from: Quest

Some disadvantages to leasing a car is that you are counting on someone to give you money every week or month depending on what you decided and if they don't have all of it well what if you needed that money now you as well have to pay not in full. a disadvantages to purchasing a new vehicle is if it is used then not all the time will absolutely everything work. its almost like a trail and era. although if it is a new car they will try to though all these specials and deals at you in your lease and it can be very overwhelming if you are not use to it.

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Rayya Co. purchases a machine for $176,400 on January 1, 2019. Straight-line depreciation is taken e...

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