On 1 January 2021, Wish Ltd decided to trade in a vehicle that had been acquired by the company at a cost of $35,000 on 1 July 2019. The vehicle had been estimated to have a useful life of 4 years (no residual value). The new vehicle had a cost of $40,000. Wish Ltd was given a trade-in allowance of $15,000 and paid the balance in cash.

On 1 January 2021, in relation to the trade in of the old vehicle, Wish Ltd should recognise in the profit and loss statement a:

Select one:

a.

Gain on trade in of $6,875

b.

Loss on trade in of $2,500

c.

Loss on trade in of $6,875

d.

Gain on trade in of $25,000