Calculate depreciation under alternative methods and account for disposal of an asset. (LO 2, 5)

The Queen Grande View Hotel purchased a van 3 years ago for \(\$ 62,000\). The company expects the van to have a useful life of 4 years and a \(\$ 10,000\) salvage value. Queen Grande View has taken three full years of depreciation expense.

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a. Assume that Queen Grande View uses straight-line depreciation. If the van is sold for \(\$ 20,000\), will there be a gain or loss on the sale? If so, how much? How will it affect Queen Grande View's financial statements for the year?

b. Assume that Queen Grande View uses double-declining balance depreciation. If the van is sold for \(\$ 9,750\), will there be a gain or loss on the sale? If so, how much? How will it affect Queen Grande View's financial statements for the year?

c. Assume Queen Grande View uses double-declining balance depreciation and sells the van for \(\$ 23,000\). Would there be a gain or loss on the sale? How would that change if Queen Grande View had been using straight-line depreciation?