Abby Corporation, a Boston company, purchased some machinery from William Industries, a corporation located in Denver Colorado. The purchases were made at a liquidation sale for a total purchase price of $720,000. The machinery was transported to Boston at a cost of $52,000 (the terms were FOB shipping point). Once the machinery arrived in Boston, Abby incurred the following costs so that the machinery could be used: electrician costs were $53,200 and plumbing costs were $15,600. In addition, after the machinery was put into production, Abby Corporation performed the normal monthly maintenance costing $8,000.

At the beginning of the 5^th year, Abby Corporation had to make an extraordinary repair at a cost of 124,000. The extraordinary repairs added an additional 8 years to the machinerys estimated useful life and increased the estimated salvage value to 28,000.

Requirements:

1. What is the total cost that Abby Corporation should capitalize for the machinery?
2. Calculate the machinerys annual depreciation using the straight line method assuming the following:
   1. That the machinery had an estimated salvage value of $15,000 as determined by Abby Corporation
   2. That the machinery had an estimated useful life
      1. Of 15 years when new
      2. Of 11 years when owned by William Industries
      3. Of 9 years remaining based upon Abby Corporations estimate
3. Calculate the machinerys new annual depreciation using the straight line method after the extraordinary repairs
4. 6 years after the extraordinary repairs, Abby Corporation sold the machinery to Ruth Company and received $146,000 in cash. Did the sale result in a Gain, a Loss, or no Gain or Loss?