Solution: Mason Company purchased a new machine on February 1, 1991, for $33,000. At the time of acquisition, the machine was estimated to have a service life of ten years and a residual value of $9,000. The company employs the straight-line method of calculating depreciation. On September 30, 1998, the machine was sold for $4,000 cash. Calculate the loss recorded on the sale.

Problem

Mason Company purchased a new machine on February 1, 1991, for $33,000. At the time of acquisition, the machine was estimated to have a service life of ten years and a residual value of $9,000. The company employs the straight-line method of calculating depreciation. On September 30, 1998, the machine was sold for $4,000 cash.

Calculate the loss recorded on the sale.