Answer:
a. $14,000 and $14,000
b. $17,000 loss
Explanation:
a. The computation of the depreciation expense using the straight line method is shown below:
Straight-line method:
= (Acquired value of the truck - residual value) ÷ (useful life)
= (79,000 - $7,000) ÷ (5 years)
= ($70,000) ÷ (5 years)
= $14,000
In this method, the depreciation is same for all the remaining useful life
So for year 1 and year 2 the same amount of depreciation is to be charged
b. Now for computing the gain or loss first we have to determine the book value which is shown below:
For two years, the depreciation would be
= $14,000 × 2 years
= $28,000
Now the book value would be
= Acquired value of an asset - accumulated depreciation
= $79,000 - $28,000
= $51,000
So, the loss would be
= Book value - sale value
= $51,000 - $34,000
= $17,000