E7-38B. (Learning Objectives 1, 2, 3: Measuring a PPEs cost; using UOP depreciation; trading in a used
Question:
E7-38B. (Learning Objectives 1, 2, 3: Measuring a PPE’s cost; using UOP depreciation;
trading in a used asset) EasyTruck Company is a large trucking company that operates throughout the EU. EasyTruck Company uses the units-of-production (UOP) method to depreciate its trucks.
EasyTruck Company trades in trucks often to keep driver morale high and to maximize fuel economy. Consider these facts about one Mack truck in the company’s fleet. When acquired in 20X6, the rig cost €360,000 and was expected to remain in service for 10 years or 1,000,000 miles. Estimated residual value was €100,000. During 20X6, the truck was driven 79,000 miles;
during 20X7, 119,000 miles; and during 20X8, 158,000 miles. After 44,000 miles in 20X9, the company traded in the Mack truck for a less expensive Freightliner with a sticker price of
€300,000. EasyTruck Company paid cash of €24,000. Determine EasyTruck’s gain or loss on the transaction. Prepare the journal entry to record the trade-in of the old truck on the new one.
Step by Step Answer:
Financial Accounting International Financial Reporting Standards Global Edition
ISBN: 9781292211145
11th Edition
Authors: Charles T. Horngren, C. William Thomas, Wendy M. Tietz, Themin Suwardy, Walter T. Harrison