In year 0, Longworth Partnership purchased a machine for $44,750 to use in its b
ID: 2447466 • Letter: I
Question
In year 0, Longworth Partnership purchased a machine for $44,750 to use in its business In year 3. Longworth sold the machine for $39,300. Between the date of the purchase and the date of the sale. Longworth depreciated the machine by $23,100. (Loss amounts should be indicated by a minus sign.) a. What amount of gain (loss) is recognized on the sale? (Leave no answer blank. Enter zero if applicable.) b. What amount of gain (loss) is recognized on the sale if the sale proceeds were increased to $66,250? c. What amount of gain (loss) is recognized on the sale if the sale proceeds were decreased to $18,200?Explanation / Answer
a) Total Gain/(Loss) Recognised 17650 Character of Recognised Gain/(Loss) Ordinary Gain 17650 1231 Gain NIL Working Note Cost of Asses 44750 Less:Depreciation -23100 Book Value 21650 Sales Proceeds 39300 Gain On Sale of Assset 17650 b) If Sale Proceeds were$66250 Total Gain/(Loss) Recognised 44600 Character of Recognised Gain/(Loss) Ordinary Gain 23100 1231 Gain 21500 Working Note Cost of Asses 44750 Less:Depreciation -23100 Book Value 21650 Sales Proceeds 66250 Gain On Sale of Assset 44600 c)If Proceeds were Decreased to $18200 Total Gain/(Loss) Recognised -3450 Character of Recognised Gain/(Loss) Ordinary Loss -3450 1231 Gain/(Loss) NIL Working Note Cost of Assets 44750 Less:Depreciation -23100 Book Value 21650 Sales Proceeds 18200 Loss On Sale of Assset -3450