Covenant Truck Company is alarge trucking eompany that operates throughout the Urited States.

Couenant Truek Company uses the units$-$of$-$production $($LDP$)$ method to depreciate its trucks. The

company trades in trucks often to keep driwer marale high and to makimize fusl economy. Consider

these faots about one Mack truck in the company's Heet When acquired in $2016,$ the tractor$-$trailer

rig east $$400,000$ and $w$ as expected to remain in service for $10$ years or $1,000,000$ miles. Estimated

residusl ualue was $$90,000.$ During $2016,$ the truck was driven $85,000$ miles, during $2017,155,000$

miles; and during $2018,175,000$ miles. After $41,000$ miles in $2019,$ the company traded in the Mack

truck for a less$-$expensive Freightliner with a sticker price lf air market walue$]$ of $$230,000.$ Covenant

Truck Company paid essh of $$29,000.$

Determine Couenant's gain or loss on the transaction. Prepare the purnal

entry to record the trade$-$in of the old truek on the new one.

Soketion:

Cost of old truek

Less: Accumulated depreciation:

Book vilue of old truck

Alternate solution setup for accumulated depreciation:

Aecumulated depreciation$]$

$=$