Willis Bus Service traded in a used bus for a new one. The original cost of...
Willis Bus Service traded in a used bus for a new one. The original cost of the old bus was $53,200. Accumulated depreciation at the time of the trade-in amounted to $35,800. The new bus cost $76,000 but Willis was given a trade-in allowance of $10,100.
a. What amount of cash did Willis have to pay to
acquire the new bus?
b. Compute the gain or loss on the disposal for financial reporting purposes.
Homework Answers
A) Amount of cash to be paid
= New bus cost - Trade in Allowance
= 76,000 - 10,100
= 65,900
B) Gain or (Loss)
= trade in Allowance - Book value of old bus
= 10,100 - (53,200-35,800)
Loss on disposal = 7,300
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