Question

Assume the following information for a vehicle which was sold for $100,000 on Dec. 31, 2009

Original cost	$250,000
Acquisition date	1/1/2007
Estimated residual value at acquisition	$50,000
Expected useful life	8 years
Depreciation method	Straight-line

The result of the sale will most likely result in:

Answer 1

• All working forms part of the answer

A	Cost	$        250,000.00
B	Residual Value	$          50,000.00
C=A - B	Depreciable base	$        200,000.00
D	Life [in years]	8
E=C/D	Annual SLM depreciation	$          25,000.00
	2007 Depreciation	$          25,000.00
	2008 Depreciation	$          25,000.00
	2009 Depreciation	$          25,000.00
F = 25000 x 3 years	Total Accumulated Depreciation	$          75,000.00
G = A - F	Book Value at the time of Sale	$        175,000.00
H	Sold for	$        100,000.00
I G - H	Loss on Sale of Vehicle	$          75,000.00

• The results of sale will most like result in:

--Debit to Loss on Sale of Vehicle $ 75,000

--Debit to Cash $ 100,000

--Debit to Accumulated Depreciation $ 75,000

--Credit to Vehicle $ 250,000