Question

Required information [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. Assume that Movelt sold a delivery truck for $22,000. Movelt had originally purchased the truck for $37,000 and had recorded depreciation for three years. Required: 1. Calculate the amount of gain or loss on disposal, assuming that Accumulated Depreciation was (a) $15,000, (b) $13,000, and (c) $21,000. (Select "None" if there is no Gain or Loss.) Gain/Loss Amount a. b. С.

Answer 1

Answers

• Requirement 1, with workings

	Cost	Accumulated Depreciation	Book Value at time of sale	Sold for	Gain / Loss	Amount
	[A]	[B]	[C = A - B]	[D]	ANSWERS
a	$37,000	$15,000	$22,000	$22,000	None	$0
b	$37,000	$13,000	$24,000	$22,000	Loss	$2,000
c	$37,000	$21,000	$16,000	$22,000	Gain	$6,000

• Requirement 2

	Accounts title	Debit	Credit
a)	Cash	$22,000
	Accumulated Depreciation - Truck	$15,000
	Truck		$37,000
b)	Cash	$22,000
	Accumulated Depreciation - Truck	$13,000
	Loss on disposal	$2,000
	Truck		$37,000
c)	Cash	$22,000
	Accumulated Depreciation - Truck	$21,000
	Gain on Disposal		$6,000
	Truck		$37,000