Question

Required information 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] Movelt 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. Assu $16,000. Movelt had originally purchased the truck for $27.000 and had recorded depreciation for three years. E9-9 Part 1 Required: 1. Calculate the amount of gain or loss on disposal, assuming that Accumulated Depreciation was (a) $11.000. (D) $8,000, and (c) $13,000. (Select "None" if there is no Gain or Loss.)

Answer 1

	Gain/Loss	Amount
a	None	$0
b	Loss	$3,000
c	Gain	$2,000

Calculations:

a)

Sale price   (A)		$16,000
Original cost	$27,000
Accumulated depreciation	($11,000)
Book value (B)		$16,000
Gain(loss) on disposal (A)-(B)		0

b)

Sale price   (A)		$16,000
Original cost	$27,000
Accumulated depreciation	($8,000)
Book value (B)		$19,000
Gain(loss) on disposal (A)-(B)		($3,000)

c)

Sale price   (A)		$16,000
Original cost	$27,000
Accumulated depreciation	($13,000)
Book value (B)		$14,000
Gain(loss) on disposal (A)-(B)		$2,000