On January 1, 2021, Jacob Inc. purchased a commercial truck for $48,000 and uses the straight-line depreciation method. The truck has a useful life of eight years and an estimated residual value of $8,000.
Assume the truck was totaled in an accident on December 31, 2022. What amount of gain or loss should Jacob Inc. record on December 31, 2022?
A) Gain, $5,000.
B) Loss, $18,000.
C) Loss, $38,000.
D) Loss, $3,000.
Answer: C
On January 1, 2020, Jacob Inc. purchased a commercial truck for $48,000 and uses the straight-line depreciation method. The truck has a useful life of eight years and an estimated residual value of $8,000.
On December 31, 2021, Jacob Inc. sold the truck for $43,000. What amount of gain or loss should Jacob Inc. record on December 31, 2021?
A) Gain, $22,000.
B) Loss, $18,000.
C) Gain, $5,000.
D) Loss, $3,000.
Answer: C
On January 1, 2020, a company purchased a commercial truck for $48,000 and uses the straight-line depreciation method. The truck has a useful life of eight years and an estimated residual value of $8,000. On December 31, 2022, the company sold the truck for $30,000. What amount of gain or loss should the company record on December 31, 2022?
A) Gain, $22,000.
B) Loss, $18,000.
C) Gain, $5,000.
D) Loss, $3,000.
Answer: D
