Question - Truck A is purchased on 1-1-X1 for 15,500. Straight-line depreciation is used, with a salvage value of 1,500. Estimated useful life is 5 years. On 12-31-X4 we are going to trade in truck A for truck B with a FMV of $18,000. Trade in allowance is $3,500. Answer the following:
1. How much is the annual depreciation for truck A using straight line depreciation?
2. What is the journal entry to record depreciation for Truck A for 12-31-X1
3. What is the accumulated depreciation for truck A as of 12-31-X4, using straight-line depreciation?
4. What is the book value of truck A on 12-31-X4?
5. Is there a gain or loss for the trade in? Gain Loss
6. What is the dollar value of the gain or loss?
7. How much cash will we have to pay out for truck B?
8. What is the journal entry needed to record the exchange on 12-31-x4?
9. If we had used the double declining method of depreciation, what would be the depreciation expense for year 1?
10. If we had used the double declining method of depreciation, what would be the depreciation expense for year 2?