Events related to the acquisition, use, and disposal of a tangible plant asset: straight-line depreciation
CJ’s Pizza purchased a delivery van on January 1, 2012, for $25,000. In addition, CJ’s paid sales tax and title fees of $1,000 for the van. The van is expected to have a four-year life and a salvage value of $6,000.
Required
a.Using the straight-line method, compute the depreciation expense for 2012 and 2013.
b. Assume the truck was sold on January 1, 2015, for $12,000. Determine the amount of gain or loss that would be recognized on the asset disposal.
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