On 1 Juanuary 2022, XYZ Company acquired and started to use a machine for the production of goods. On the same date, the following expenditures were incurred relating to the machine. Purchase price €40,000 Freight and insurance costs €2,000 Installation and assembly costs €1, 600 Costs of testing prior to use €1,200 Additional information is as follows: XYZ Company used the cost model for the machine which had an eight-year useful life and no residual value and was depreciated using the sttraight - lien method. XYZ Company did not change the useful life, the residual value and the depreciation method of the machine for 2022 through 2024 The machine was not expected to be sold before 31 December 2024. Question: Assume that XYZ Company sold the machine for €26,000 cash on 31 December 2022. What amount of gain or loss should XYZ Company recognise in its 2024 financial statements as a result of the sale of the machine?

On 1 Juanuary 2022, XYZ Company acquired and started to use a machine for the production of goods. On the same date, the following expenditures were incurred relating to the machine. Purchase price €40,000 Freight and insurance costs €2,000 Installation and assembly costs €1, 600 Costs of testing prior to use €1,200 Additional information is as follows: XYZ Company used the cost model for the machine which had an eight-year useful life and no residual value and was depreciated using the sttraight - lien method. XYZ Company did not change the useful life, the residual value and the depreciation method of the machine for 2022 through 2024 The machine was not expected to be sold before 31 December 2024. Question: Assume that XYZ Company sold the machine for €26,000 cash on 31 December 2022. What amount of gain or loss should XYZ Company recognise in its 2024 financial statements as a result of the sale of the machine?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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