Zedel Delivery Services has a December 31, 2008 year end. On January 1, 2008, Zedel has a delivery van with a cost of $35,000 and accumulated amortization of $12,000. The van was expected to have a residual value of $5,000 and a useful life of 5 years. Zedel uses straight line amortization. Zedel plans to replace its delivery van on April 1, 2008, and is considering two alternatives.

1. Zedel has been offered $14,000 for the old van. If Zedel accepts this offer, Zedel would then purchase a replacement for $50,000 cash.

2. Trade the old van for a new one. The new van has a list price of $30000, but the dealer will give a $16000 trade-in allowance on the old van. Zedel will have to pay additional cash of $34,000.

(a) Record the updated amortization on the old van to April 1, 2008.

(b) Record the disposal of the van under each of the two alternatives.

(c) Which alternative do you recommend and why?