Events related to the acquisition, use, and disposal of a tangible plant asset: straight-line depreciation
Cook Wrecker Co. purchased a truck on January 1, 2010, for $37,000. In addition, Cook paid sales tax and title fees of $2,000 for the truck. The truck is expected to have a four-year life and a salvage value of $7,000.
Required
a. Using the straight-line method, compute the depreciation expense for 2010 and 2011.
b. Assume the truck was sold on January 1, 2013, for $15,000. Determine the amount of gain or loss that would be recognized on the asset disposal.