Question: Core Carpet Factory purchased a $40,000 binding machine (seven year property) six months ago that they expected to use for at least ten years. They

Core Carpet Factory purchased a $40,000 binding machine (seven year property) six months ago that they expected to use for at least ten years. They began to use the machine immediately. Unfortunately, the machine kept breaking down and the company finally returned it to the manufacturer. Because Core would not allow them to repair it and purchased an alternative machine, they refunded only $20,000 to Core for the return of the machine. How should Core treat the loss on the machine? How would your answer change it they had used the machine for 18 months before returning it and receiving $20,000?

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