C is corrent. To determine the amount of depreciation expense, both the machinery and the accumulated depreciation (AD) accounts must be analyzed. Machinery was sold during year 2 for $26,000, resulting in a loss of $4,000. Therefore, the machinery sold must have had a book value of $30,000 (Book value - $26,000 = $4,000). Since the machinery sold originally cost $40,000, the AD at the time of sale must have been $10,000 ($40,000 - AD = $30,000). Now a T-account is set up for AD
The year 2 depreciation expense is $28,000.
A is incorrect. To determine the amount of depreciation expense, both the machinery and the accumulated depreciation (AD) accounts must be analyzed. Machinery was sold during year 2 for $26,000, resulting in a loss of $4,000. Therefore, the machinery sold must have had a book value of $30,000 (Book value - $26,000 = $4,000). Since the machinery sold originally cost $40,000, the AD at the time of sale must have been $10,000 ($40,000 - AD = $30,000). Now a T-account is set up for AD
A is incorrect. To determine the amount of depreciation expense, both the machinery and the accumulated depreciation (AD) accounts must be analyzed. Machinery was sold during year 2 for $26,000, resulting in a loss of $4,000. Therefore, the machinery sold must have had a book value of $30,000 (Book value - $26,000 = $4,000). Since the machinery sold originally cost $40,000, the AD at the time of sale must have been $10,000 ($40,000 - AD = $30,000). Now a T-account is set up for AD
A is incorrect. To determine the amount of depreciation expense, both the machinery and the accumulated depreciation (AD) accounts must be analyzed. Machinery was sold during year 2 for $26,000, resulting in a loss of $4,000. Therefore, the machinery sold must have had a book value of $30,000 (Book value - $26,000 = $4,000). Since the machinery sold originally cost $40,000, the AD at the time of sale must have been $10,000 ($40,000 - AD = $30,000). Now a T-account is set up for AD
