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DaniilM [7]
3 years ago
11

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?
Business
1 answer:
lianna [129]3 years ago
8 0

Answer:

a loss of $3,000

Explanation:

A company makes a gain on the disposal of an asset when the amount received from the disposal is higher than the net book value or carrying amount of the asset.

The netbook value of the asset is the difference between the cost and the accumulated depreciation of the asset. The accumulated depreciation is the total depreciation over the used life of the asset and the depreciation is the result of the cost less residual value divided by the estimated asset life.

In light of the above,

Annual depreciation = ($48,000 - $8,000)/8

= $5,000

Between January 1 2020 and December 31 2022 is 3 years,

Accumulated depreciation at December 31, 2022

= 3 * $5,000

= $15,000

NBV at December 31, 2022

= $48,000 - $15,000

= $33,000

Gain/(loss) on disposal = $30,000 - $33,000

= ($3,000)

The company would record a loss of $3,000

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<h3>What is the present value?</h3>

The present value of future cash flows is the current value or the value in today's dollars.  It is computed by discounting the future values at the appropriate discount rate.

The present value can be computed using the Present Value formula, an online finance calculator, or the PV factor table.

Formula

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Learn more about present value at brainly.com/question/20813161

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