Sunland Company purchased machinery for $915000 on January 1, 2017. Straight-line depreciation has been recorded based on a $56000 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 Sunland receive from the sale of the machinery?

 

$248033

$192033

$149033

$136033

 

Answer:

$192033

Step-by-step explanation

We need to determine the book value when the asset was sold:

Depreciation would be charged for 4 years 4 months

annual depreciation charge=cost-salvage value/useful life=($915000-$56,000)/5=$ 171800

Total accumulated depreciation=4.33*$ 171800=$ 743,894.00 

carrying value=$915000-$ 743,894=$ 171106

gain on disposal=disposal proceeds-carrying value

$21500=X-$ 171106

X=$21500+$ 171106=$ 192606

The closest option is $192033,the difference is due to rounding error