In: Accounting
[The following information applies to the questions displayed below.]
MoveIt Corporation is the world’s leading express-distribution company. In addition to its 643 aircraft, the company has more than 57,000 ground vehicles that pick up and deliver packages. Assume that MoveIt sold a delivery truck for $15,000. MoveIt had originally purchased the truck for $25,000 and had recorded depreciation for three years.
Using the following structure, indicate the effects (accounts, amounts, and + for increase and − for decrease) of the disposal of the truck, assuming that Accumulated Depreciation was (a) $10,000, (b) $9,000, and (c) $14,000. (Enter any decreases to Assets, Liabilities, or Stockholders
1 | Assets | = | Liabilities | + | Stockholder's equity | |||||
Cash | + | Equipment | + | Accumulated depreciation | ||||||
a | 15000 | -25000 | 10000 | |||||||
b. | 15000 | -25000 | 9000 | -1000 | ||||||
c. | 15000 | -25000 | 14000 | 4000 | ||||||
a. | Gain/(Loss) on sale | |||||||||
$ | ||||||||||
Sale value | 15000 | |||||||||
Add:Accumulated dep. | 10000 | |||||||||
25000 | ||||||||||
Less: Original cost | 25000 | |||||||||
Gain/(Loss) on sale | 0 | |||||||||
b. | Gain/(Loss) on sale | |||||||||
$ | ||||||||||
Sale value | 15000 | |||||||||
Add:Accumulated dep. | 9000 | |||||||||
24000 | ||||||||||
Less: Original cost | 25000 | |||||||||
Gain/(Loss) on sale | -1000 | |||||||||
Loss on sale will reduce the stockholder's equity | ||||||||||
c. | Gain/(Loss) on sale | |||||||||
$ | ||||||||||
Sale value | 15000 | |||||||||
Add:Accumulated dep. | 14000 | |||||||||
29000 | ||||||||||
Less: Original cost | 25000 | |||||||||
Gain/(Loss) on sale | 4000 | |||||||||
Gain on sale will increase the stockholder's equity |