A copy machine cost $ 36 comma 000$36,000 when new and has accumulated depreciation of $ 34 comma 000$34,000. Suppose Sun Graphics and Designs CenterSun Graphics and Designs Center junks this machine, receiving nothing in return. What is the result of the disposal transaction?

Question

Business

Miah Durham

28 November, 15:49

A copy machine cost $ 36 comma 000$36,000 when new and has accumulated depreciation of $ 34 comma 000$34,000. Suppose Sun Graphics and Designs CenterSun Graphics and Designs Center junks this machine, receiving nothing in return. What is the result of the disposal transaction?

+4

Answers (1)

Know the Answer?

Khalil Rice · Answer 1

Loss of $2,000

Explanation:

As provided,

Cost of machine in both cases = $36,000

Accumulated depreciation = $34,000

Therefore, carrying value = Cost - Accumulated depreciation = $36,000 - $34,000 = $2,000

Now, since this asset is discarded as junk for $0, there will be a loss on such transaction to be recorded = $2,000

This loss shall be reported in income statement as Debit.

Further, after this transaction machine value in books shall be $0.

Journal Entry for this will be:

Loss on sale of Machinery A/c Dr. $2,000

Accumulated Depreciation A/c Dr. $34,000

To Machinery A/c $36,000