On January 1, 2018, A Co. purchased a machine at a cost of $84,000. The machine is expected to last 5 years and has a residual value of $14,000.

Required:

1. Compute depreciation for the five year periods ending December 31 using the straight-line, sum-of-the-years digits and DDB method.

straight-line:

sum-of-the-years digits:

DDB method:

2. The machine is sold on January 1,2020 for $40,000. Compute the gain or loss for each method.