Truck A is purchased on 1-1-X1 for 15,500. Straight-linedepreciation is used, wi

Question

Truck A is purchased on 1-1-X1 for 15,500. Straight-linedepreciation is used, with a salvage value of 1,500. Estimateduseful life is 5 years. On 12-31-X4 we are going to trade intruck A for truck B with a FMV of $18,000. Trade in allowance(FMV) for Truck A is $3,500. Answer the following:

8. What is the accumulated depreciation for truck A as of12-31-X4, using straight-linedepreciation? _____________________

9. What is the book value of truck A on12-31-X4?_________________

(Book value =The cost of the asset – Accumulateddepreciation)

10. What is the dollar value of the gain orloss?__________________

[Book Value – Trade In Allowance (FMV) of asset trading in= (Gain)/Loss]

Explanation / Answer

Number 9 is the 15,500 minus the answer for #8
Number 10 is 15,500 minus the answer for #9. if it's positiveit's a gain and if it's negative it's a loss

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