# Concord Corporation purchased machinery for \$855000 on January 1, 2017. Straight-line depreciation has been recorded based on a \$53000 salvage value and a 5-year useful life. The machinery was sold on May 1, 2021 at a gain of \$21500. How much cash did Concordreceive from the sale of the machinery?

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Concord Corporation purchased machinery for \$855000 on January 1, 2017. Straight-line depreciation has been recorded based on a \$53000 salvage value and a 5-year useful life. The machinery was sold on May 1, 2021 at a gain of \$21500. How much cash did Concordreceive from the sale of the machinery?

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Step 1

Straight line method of depreciation is the most straightforward approach that implies that the value of a fixed asset gets reduced due to wear and tear, efflux of time or the technology becomes outdated. Straight line method is determined by separating the distinction between an asset’s cost and its normal residual value divided by the number of years it is expected to be utilized.

Step 2

To calculate the sales price of machinery:

Cost of machine= \$855,000

Salvage value= \$53,000

Useful life= 5 years

• Assuming the year to be calendar year i.e. beginning from 1st and ending at 31st Dec.

Sale price= Book value of machine o...

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