Question

A truck costs $ 52 comma 000 when new and has accumulated depreciation of $ 40 comma 000. Suppose John Towing exchanges the truck for a new truck. The new truck has a market value of $ 70 comma 000​, and John pays cash of $ 44 comma 000. Assume the exchange has commercial substance. What is the result of this​ exchange? A. No gain or loss B. Gain of $ 14 comma 000 C. Gain of $ 58 comma 000 D. Loss of $ 14 comma 000

Answer 1

B.Gain of $14,000

Step-by-step explanation:

Truck Old-Cost $52,000

Accumulated Depreciation ($40,000)

Written Down Value $12,000

New Truck $70,000

Less: Cash paid (44,000)

Sale Proceeds of old truck 26,000

Gain on disposal of old truck=26,000-12,000=$14,000