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Return to question requireu llIIULID LIUI E9-9 Demonstrating the Effect of Book Value on Reporting an Asset Disposal (LO 9-5) The following information applies to the questions displayed below.) Part 2 of 3 FedEx Corporation is the world's leading express-distribution company. In addition to its 643 aircraft, the company has more than 57,000 ground vehicles that pick up and deliver packages. Assume that FedEx sold a delivery truck for $16,000. FedEx had originally purchased the truck for $28,000 and had recorded depreciation for three years. points E9-9 Part 2 2. Using the following structure, indicate the effects (accounts, amounts, and + for increase and - for decrease) of the disposal of the truck, assuming that Accumulated Depreciation was (a) $12,000, (b) $10,000, and (c) $15,000. (Enter any decreases to Assets, Liabilities, or Stockholders' Equity with a minus sign.) Answer is complete but not entirely correct. Liabilities Stockholders' Equity (a) (b) Retained Earnings % (18,000) Assets Cash Equipment Accumulated Depreciation-Equipment Cash Equipment Accumulated Depreciation Equipment Cases Equipment Accumulated Depreciation Equipment 0% (28,000) 12,000 (2.000) (28,000) 12,000 3,000 (28,000) 12,000 X ~ Retained Earnings (13,000)

Answer 1

Liabilities + Sockholders' Equity Retained Earnings 0 Assets a) Cash Equipment Accumulated Dep. b) Cash Equipment Accumulated Dep. c) Cash Equipment Accumulated Dep. Retained Earnings (2,000) 16,000 (28,000) 12,000 16,000 (28,000) 10,000 16,000 (28,000) 15,000 Retained Earnings 3,000 Explanation a) Cash is received $16000 from selling truck, Retained Earning i.e, profit/loss =0 Retained Earnings = Cash received - (Equipment - Accumulated Dep.) = $16000 - ($28000 - $12000) = $0 b) Cash is received $16000 from selling truck, Retained Earning i.e, profit/loss = ($2,000) Retained Earnings = Cash received - (Equipment - Accumulated Dep.) = $16000 - ($28000 - $10000) = ($2,000) Loss b) Cash is received $16000 from selling truck, Retained Earning i.e, profit/loss = $3,000 Retained Earnings = Cash received - (Equipment - Accumulated Dep.) = $16000 - ($28000 - $15000) = $3,000 Profit

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