Question
CD Company has a truck that it wants to sell. The truck had an original cost of $60,000, was purchased three years ago, and was
CD Company has a truck that it wants to sell. The truck had an original cost of $60,000, was purchased three years ago, and was expected to have a useful of six years with no salvage value. Using straight-line depreciation and assuming that depreciation expense for three full years has been recorded, prepare journal entries to record the disposal of the truck under each of the following independent conditions:
(1)CD Company sells the truck for $20,000 cash.
(2)The old truck is wrecked and CD Company hauls it to the junkyard.
(3)CD Company exchanges the old truck with FG Company for another car. Assuming that this exchange has commercial substance, the fair value of the old truck is $32,000. Besides, CD Company paid $2,000 cash to FG Company to acquire the printer.
(4)CD Company exchanges the old truck with FG Company for another car. Assuming that this exchange does not have commercial substance, the fair value of the old truck is $32,000. Besides, CD Company paid $2,000 cash to FG Company to acquire the printer.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Auditing A Business Risk Approach
Authors: Larry E. Rittenberg, Karla Johnstone, Audrey Gramling
7th Edition
0324663722, 978-0324663723
