#62 On Dec 31, 2019, XYZ Company sells a machine

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Question

#62 On Dec 31, 2019, XYZ Company sells a machine that originally

On Dec 31, 2019, XYZ Company sells a machine that originally cost $150,000 for $90,000 cash. The machine was placed in service on January 1, 2015. It was depreciated using the straight-line method with an estimated salvage value of $25,000 and a useful life of 10 years. Determine the profit or loss made on disposal of the machine and pass Journal Entry. .(5 Marks) b. Depletion and Amortization are the processes of allocating the cost of a of different asset to expense in the accounting periods benefiting from its use. Explain the assets applicable for such processes.

Answer

Depletion is a gradual exhaustion of natural resource reserves to an expense account for extracting natural resources For example : Timber, minerals, and oil extraction from the earth.


Amortization is the allocation of the cost of intangibles over the useful life or legal life of the intangibles for example copyrights, patents, franchise rights, trademarks.