**Problem:**On January 1, 2019, Jacob Inc. 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, 2021, Jacob Inc. sold the truck for $30,000. What amount of gain or loss should Jacob Inc. record on December 31, 2021?A. Gain, $22,000. B. Loss, $18,000. C. Gain, $5,000. D. Loss, $3,000.

Answer : Depreciation per year = ($48,000 - $8000) / 8 = $5,000 Truck price : On 31 Dec.2019 48,000 - 5000 43,000 On 31 Dec. 2020 43,000 - 5000 38,000 On 31 Dec. 2021 38,000 - 5000 33,000 Truck Sold at = $30,000 Gain (Loss) on truck sold = Selling price - Book value at 31, Dec,2021 Gain (Loss) on truck sold = $30,000 - $33,000 (Loss ) = ($3,000) So option D. Loss, $3000 is correct answer.

Answered: cember 31, 2021, Jaco uld Jacob Inc.…

Business

Accounting

cember 31, 2021, Jaco uld Jacob Inc. record o

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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