Account for disposal of property, plant, and equipment

Derricks Demolition purchased a truck on June 15, 2015, for $35,000. A 6% sales tax was added to the cost. In addition, Derricks paid $2,500 to ship the truck to its main office. The truck arrived on July 1, just in time to start work on a major customer project. The truck was estimated to have a 10-year service life. On January 1, 2018, Derricks purchased and installed a truck-mounted generator for $8,000 (sales tax included). With the generator, Derricks was able to increase the number of services provided to its customers. On July 1, 2019, Derricks replaced two of the tires on the truck for $1,000. On December 31, 2020, Derricks sold the truck for $22,000. Derricks Demolition recognized a ______ of $ ________ on the sale. (Derricks uses the straight-line method of depreciation.)

Select one:

a. gain: $650

b. loss; $1,389

c. gain; $1,450

d. loss; $620

e. loss; $422

PreviousSave AnswersNext