Answer:
b. A debit to loss on sale for $2,625
Explanation:
As per straight line depreciation method,
Depreciation rate = [tex]\frac{100}{4}[/tex] = 25%
Depreciation rate as per double declining balance method is twice of straight line depreciation rate.
Now, as per double declining balance method:
Depreciation rate = 2×25% = 50%
Machine was purchased on September 1, year 1. This means depreciation expense for year 1 will be charged for 4 months only.
Depreciation expense for year 1 = $75,000×50%×[tex]\frac{4}{12}[/tex]
Depreciation expense for year 1 = $12,500
(Depreciation expense schedule for 3 years has been shown below.)
Now,
Selling price < Book value
Thus, the company incurred loss on sale of machine.
Loss on sale of machine = Book value - selling price
Loss on sale of machine = $15,625 - $13,000
Loss on sale of machine = $2,625
Now, the journal entry for sale of machine has been shown below.
b. A debit to loss on sale for $ 2,625
The following calculation in the journal regarding sales losses
Year 1 72,000
Year 2 62,500
Year 3 31,250
Year 1 50%
Year 2 50%
Year 3 50%
Year 1 12,500
Year 2 31,250
Year 3 15,625
Year 1 62,500
Year 2 31,250
Year 3 15,625
Losses on engine sales = value - damage
Losses on engine sales = $ 15,625 - $ 13,000
Losses on engine sales = $ 2,625
There are several factors that cause a decrease in the ability of fixed assets to provide benefits that can be identified as physical depreciation or functional depreciation:
Physical depreciation occurs from damage and wear when used and due to weather effects.
Functional depreciation (functional depreciation) occurs if the said fixed assets are no longer able to provide benefits at the level as expected.
Learn More
Depreciation https://brainly.com/question/13451670
Loss on sale https://brainly.com/question/13451670
Details
Grade: High School
Subject: Business
Keyword: depreciation, loss, sale
