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Name: A previously used piece of machinery is purchased from XYZ company, wh
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Description: A previously used piece of machinery is purchased from XYZ company, who has fully depreciated the equipment in their accounting system after using it in production. When bought new, the machine cost $1,000,000, and XYZ company took a total of $800,00

Century 21 Accounting General Journal

11th Edition

ISBN:9781337680059

Author:Gilbertson

Publisher:Gilbertson

Chapter19: Accounting For Plant Assets, Depreciation, And Intangible Assets

Section: Chapter Questions

Problem 1AFE

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A previously used piece of machinery is purchased from XYZ company, who has fully depreciated the equipment in their accounting system after using it in production. When bought new, the machine cost $1,000,000, and XYZ company took a total of $800,000 in depreciation before selling the machine to us, using an assumption of $200,000 salvage value at the end of it's useful life. We paid XYZ company $150,000 for this machine, and estimate we will use it in our production line for 4 years. What is the maximum amount of depreciation we can claim against this machine?

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