Truck A is purchased on 1-1-X1 for 15,500. Straight-line depreciation is used, with a salvage value of 1,500. Estimated useful life is 5 years. On 12-31-X4 we are going to trade in truck A for truck B with a FMV of $18,000.
Trade in allowance is $3,500. Answer the following:
1. How much is the annual depreciation for truck A using straight line depreciation
2. What is the journal entry to record depreciation for Truck A for 12-31-X1
3. What is the accumulated depreciation for truck A as of 12-31-X4, using straight-line depreciation?
4. What is the book value of truck A on 12-31-X4?_________________
5. Is there a gain or loss for the trade in? Gain Loss
6. What is the dollar value of the gain or loss?__________________
7. How much cash will we have to pay out for truck B ?_____________
8. What is the journal entry needed to record the exchange on 12-31-x4?
9. If we had used the double declining method of depreciation, what would be the depreciation expense for year 1? ______________
10. If we had used the double declining method of depreciation, what would be the depreciation expense for year 2?