Looser Co has a machine that cost $510,000 on March 20, 2011 This old machine had an estimated life of ten years and a salvage value of $30,000 On December 23, 2015, the old machine is exchanged for a new machine with a fair value of $342,000 The exchange lacked commercial substance Looser also rec...

Cost of Old Machine 51000000 Life 10 year Residual V ...

Looser Co. has a machine that cost $510,000 on March 20, 2011. This old machine had an

Question:

Looser Co. has a machine that cost $510,000 on March 20, 2011. This old machine had an estimated life of ten years and a of $30,000. On December 23, 2015, the old machine is exchanged for a new machine with a fair value of $342,000. The exchange lacked commercial substance. Looser also received $36,000 cash. Assume that the last fiscal period ended on December 31, 2014, and that double declining balance depreciation is used. Instructions: a. Show the calculation of the amount of gain or loss to be recognized by Looser Co. from the exchange. b. Prepare all entries that are necessary on December 23, 2015.
Salvage Value
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important...