A Machine Was Purchased for $100,000 in 2011 and Used

question 145

Essay

A machine was purchased for $100,000 in 2011 and used for four years,during which $40,000 of depreciation accumulated.The machine was then sold for $50,000 cash.What is the gain or loss on this transaction? Assume depreciation is up to date at the time of the sale.

---

Definitions:

Liabilities

Liabilities that a business must settle in the future, representing the financial debts owed to external parties.

Prepaid Expenses

Costs that have been paid in advance for goods or services to be received in the future.

Unearned Revenues

Money received by a company for goods or services that have not yet been provided to the customer.

Adjusting Entries

Journal entries made in an accounting period to allocate income and expenditure to the correct periods.