Question

[The following information applies to the questions displayed below.] Movelt Corporation is the world's leading express-distribution company. In addition to the world's largest fleet of all-cargo aircraft, the company has more than 54,000 ground vehicles that pick up and deliver packages. Assume that Movelt sold a delivery truck for $8,000. Movelt had originally purchased the truck for $14,000 and had recorded depreciation for three years. value: 0.90 points Required: 1. Calculate the amount of gain or loss on disposal, assuming that Accumulated Depreciation was (a) $6,000, (b) $4,000, and (c) $9,000. (Select "None" if there is no Gain or Loss.) Gain/Loss Amount | b.

Answer 1

1. Book Value = Original Cost - Accumulated Depreciation
If Cash proceeds from sale is greater than book value, there is gain, if lower than book value, it is loss

	Gain/Loss	Amount
a	No Gain No Loss	$                    -	=14000-6000-8000
b	Loss	$             2,000	=14000-4000-8000
c	Gain	$             3,000	=8000-(14000-9000)

2.

	Assets		=	Liabilities		+	Stockholder's Equity
(a)	Cash	$             8,000
	Equipment	$         -14,000
	Accumulated Depreciation	$             6,000
(b)	Cash	$             8,000					Retained Earnings	$   -2,000
	Equipment	$         -14,000
	Accumulated Depreciation	$             4,000
(c )	Cash	$             8,000					Retained Earnings	$    3,000
	Equipment	$         -14,000
	Accumulated Depreciation	$             9,000

Since Accumulated Depreciation is negative figure under assets, therefore accumulated depreciation is added for asset disposed off

4.

	Account Titles	Debit	Credit
(a)	Cash	$             8,000
	Accumulated Depreciation	$             6,000
	Equipment		$       14,000
(b)	Cash	$             8,000
	Accumulated Depreciation	$             4,000
	Loss on sale	$             2,000
	Equipment		$       14,000
(c )	Cash	$             8,000
	Accumulated Depreciation	$             9,000
	Gain on sale		$          3,000
	Equipment		$       14,000