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[The following information applies to the questions displayed below.] MoveIt Corporation is the world’s leading express-distribution...

[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.

  1. 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

Solutions

Expert Solution

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

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