Hamilton Company purchased a machine for $11,800 on January 1, 2016. The machine
ID: 2394699 • Letter: H
Question
Hamilton Company purchased a machine for $11,800 on January 1, 2016. The machine has been depreciated using the straight-line method over a four-year life with a $1,600 residual value. Hamilton sold the machine on January 1, 2018, for $8,000 What is straight-line depreciation for the year ended December 31, 2016, and what is the book value on December 31, 2017? What is straight-line depreciation for the year ended December 31, 2016? The depreciation is $ What is the book value on December 31, 2017 The book value is $Explanation / Answer
Depreciation as per Straight line method = (Cost - Salvage Value) / No. of useful life
= ($11800 - $1600) / 4 = $2550 each year depreciation
Cost of the Machinery on January 1, 2016= $11800
Less: Depreciation for the year 2016 = $2550 ( ANSWER A)
Book Value on January 1, 2017 $9250
Less: Depreciation for the year 2017 = $2550
Book Value on January 1,2018
or DECEMBER 31, 2017 $6700 (ANSWER B)
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