The total amount of accumulated depreciation on August 1, 2007 is $32,250.
Cost of machine 48,000
Less: Accumulated Depreciation (32,250)
Book value 15,750
Less: Sale proceeds (5,000)
Loss on sale of machine 10,750
Presentation of Transactions on Statement of Cash Flows
In 2004 the transaction for purchase of machinery would be subtracted from the cash flow from investing activities and the depreciation expense for the year would be included in the non cash adjustments to reconcile net income. The depreciation expense for 2005, 2006 and 2007 will be presented in the non cash items of adjustments to reconcile net income. The sale proceeds from the sale of machine in 2007 will be added in the cash flow from investing activities section while the loss on sale of machine will be included in the non cash adjustments to reconcile net income.
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