Question: 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

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?

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