Elite Cleaners bought a new machine on January 1, 2010, for $75,000. The company expects the machine
Question:
Elite Cleaners bought a new machine on January 1, 2010, for $75,000. The company expects the machine to have a useful life of 10 years and a salvage value of $10,000. The company’s fiscal year ends on December 31.
Requirements
1. Calculate the depreciation expense for the fiscal years 2010 and 2011 using each of the following methods:
a. Straight-line method
b. Double-declining balance method
2. Elite Cleaners sold the machine on January 1, 2012, for $59,000. What was the gain or loss on the sale using each of the depreciation methods? (Round your answers.) On which financial statement would the gain or loss appear?
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important...
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Related Book For
Financial Accounting: A Business Process Approach
ISBN: 978-0136115274
3rd edition
Authors: Jane L. Reimers
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