Question

ans it fast plz

Q1. (25 marks) Hailstorm Ireland exchanged a three-year-old truck for a new truck that had a list price of $50,000, which was its fair value. The old truck originally cost $65,000 and has accumulated depreciation of $25,000 to the date of exchange. In addition to the $45,000 trade-in given for the old truck, HI paid $8,000 cash to complete the deal. Record the asset exchange with all necessary calculations Refer to the class lecture, elaborate the accounting procedures involved for asset disposal through discarding, selling, or exchanging an asset.

Answer 1

Particulars	Debit	Credit
Accumulated depreciation	25,000
New Truck Account Dr	50,000
Old truck		65,000
Cash		8,000
Profit on sale of old truck		2,000
(being purchase of new truck for exchange of old truck and cash)

Profit on sale of asset

New Asset Price = 50,000

Cash Given = 8,000

Old Asset realised (50,000-8,000) = 42,000

Old Asset Written down value (65,000-25,000) = 40,000

Profit on sale of asset =(42,000-40,000) = 2,000

Note :

The price of new truck 50,000 is given in question . so the 45,000 has no importance because also paying 8,000 cash so the old truck is realising for 42,000(50,000-8,000)