Question: Demonstrating the Effect of Book Value on Recording an Asset Disposal through Sale Refer to problem below.
Required: 1. Calculate the amount of gain or loss on disposal, assuming that
a. The accumulated depreciation was $12,000.
b. The accumulated depreciation was $10,000.
c. The accumulated depreciation was $15,000.
2. Based on the three preceding situations, explain how the amount of depreciation recorded up to the time of disposal affects the amount of gain or loss on disposal.
Problem: Demonstrating the Effect of Book Value on Reporting an Asset Disposal through Sale FedEx is the world's leading express-distribution company. In addition to the world's largest fleet of all cargo aircraft, the company has more than 46,400 ground vehicles that pick up and deliver packages. Assume that FedEx sold a delivery truck for $16,000. FedEx had originally purchased the truck for $28,000 and had recorded depreciation for three years.
Required: 1. Give the journal entry for the disposal of the truck, assuming that
a. The accumulated depreciation was $12,000.
b. The accumulated depreciation was $10,000.
c. The accumulated depreciation was $15,000.
2. Based on the three preceding situations, explain how the amount of depreciation recorded up to the time of disposal affects the amount of gain or loss on disposal.