On January 1, 2005, Bloom, Inc. purchased a machine for $30,000. Bloom uses stra

Question

On January 1, 2005, Bloom, Inc. purchased a machine for $30,000. Bloom uses straight-line depreciation and estimates an eight-year useful life and a $1,200 salvage value. On December 31, 2012, Bloom cannot locate a buyer for the used machine so it is scrapped. In recording the machine retirement, Bloom should reflect:
Answer
A. No gain or loss
B. A $1,200 gain
C. A $1,200 loss
D. A $28,800 loss
E. None of the above

Explanation / Answer

straight-line depreciation => The depreciation of an asset is spread evenly across the life and estimated with salvage value of $1,200 no buyer found so C. A $1,200 loss

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