Homework Answers
a.
Purchase price = $21,200
Sales tax and title fees = $1,220
Cost of Auto = Purchase price + Sales tax and title fees
= 21,200+1,220
= $22,420
Salvage value = $6,850
Useful life = 5 years
Annual depreciation expense = ( Cost of auto- Salvage value)/Useful life
= (22,420-6,850)/5
= $3,114
2018 depreciation = $3,114
2019 depreciation = $3,114
b.
Book value of auto on January 1, 2020 = Cost of auto- Accumulated depreciation
= 22,420-(3,114+3,114)
= 22,420-6,228
= $16,192
Sale price of auto = $18,621
Gain on sale of auto = Sale price of auto - Book value of auto on January 1, 2020
= 18,621-16,192
= $2,429
| a. | 2018 depreciation | $3,114 | per year |
| 2019 depreciatoin | $3,114 | per year | |
| b. | Gain | on sale | $2,429 |
Kindly comment if you need further assistance. Thanks‼!
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