Alpha Company purchased the following asset:

Cost of Truck: 125,000

Residual Value: 25,000

Estimated Useful Life: 20 years or 500,000 miles

Assume the truck was driven 35,000 miles in year 1 and 40,000 miles in year 2

At the end of year 2, the asset was sold for $105,000

Required

• Calculate the depreciation expense for the first two years using the straight-line method and the units of activity method.

• Calculate accumulated for methods at the end of year 2.

• Calculate the carrying value at the end of year 2 using both methods

• Calculate the gain or loss on the sale of the asset. Make sure to show the amount and whether it is a gain or loss.

	Straight Line	Units of Activity
Depreciation Expense Year 1
Depreciation Expense Year 2
Accumulated Depreciation Year 2
Carrying Value Year 2
Gain or Loss on Sale

Calculations