Accounting for the Disposal of Assets
Response to the following problem:
Canlas Concrete Company has a truck that it wants to sell. The truck had an original cost of $80,000, was purchased four years ago, and was expected to have a useful life of eight years with no salvage value.
Using straight-line depreciation, and assuming that depreciation expense for four full years has been recorded, prepare journal entries to record the disposal of the truck under each of the following independent conditions:
1. Canlas Concrete Company sells the truck for $45,000 cash.
2. Canlas Concrete Company sells the truck for $38,000 cash.
3. The old truck is wrecked and Canlas Concrete Company hauls it to the junkyard.