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Calculate gain on sale of machinery

Bobby Jenks Company purchased machinery for $160,000 on January 1, 2004. Straight-line depreciation has been recorded based on a $10,000 salvage value and a 5-year useful life. The machinery was sold on May 1, 2008 at a gain of $3,000. How much cash did Bobby Jenks receive from the sale of the machinery?

Keach Company traded machinery with a book value of $285,000 and a fair value of $270,000. It received in exchange from Marlin Company a machine with a fair value of $300,000. Keach also paid cash of $30,000 in the exchange. Marlin's machine has a book value of $285,000. What amount of gain or loss should Keach recognize on the exchange?

Solution Preview

Please see the attached Excel spreadsheet.

Bobby Jenks Company
Depreciation Formula
160,000 - 10,000 / 5 years = 30000

2004 2005 2006 2007 Jan-08 Feb-08 Mar-08 Apr-08 May-08
Beginning Value 160,000 130,000 100,000 70,000 40,000 37,500 35,000 32,500 30,000
Depreciation 30,000 30,000 30,000 30,000 ...

$2.19