Problem - Mathews Bus Service traded in a used bus for a new one. The original cost of the old bus was $52,000. Accumulated depreciation at the time of the trade-in amounted to $34,000. The new bus cost $65,000, but Mathews was given a trade-in allowance of $10,000.
a. What amount of cash did Mathews have to pay to acquire the new bus?
b. Compute the gain or loss on the disposal for financial reporting purposes.
c. Explain how the gain or loss would be reported in the company's income statement.