Question

MoveIt 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 MoveIt sold a delivery truck for $22,000. MoveIt had originally purchased the truck for $37,000 and had recorded depreciation for three years.

2. 
   Using the following structure, indicate the effects (accounts, amounts, and + for increase and − for decrease) of the disposal of the truck, assuming that Accumulated Depreciation was (a) $15,000, (b) $13,000, and (c) $21,000.

Answer 1

a. Accumulated Depreciation $15,000
Sales Price (A)		$22,000
Book Value of Truck	$37,000
Less: Accumulated Depreciation	-$15,000
Carrying Value (B)		$22,000
Gain / (Loss) (C = A - B)		$0
a. Accumulated Depreciation $13,000
Sales Price (A)		$22,000
Book Value of Truck	$37,000
Less: Accumulated Depreciation	-$13,000
Carrying Value (B)		$24,000
Gain / (Loss) (C = A - B)		-$2,000
a. Accumulated Depreciation $21,000
Sales Price (A)		$22,000
Book Value of Truck	$37,000
Less: Accumulated Depreciation	-$21,000
Carrying Value (B)		$16,000
Gain / (Loss) (C = A - B)		$6,000