Concord Truck Company is a large trucking company. The company uses the units-of-production (UOP) method to depreciate its trucks. To follow are facts about one Mack truck in the company's fleet. (Click the icon to view the facts.) Read the requirements. Requirement 1. Determine Concord's gain or loss on the transaction. Begin by determining the formula needed to calculate the gain or loss and then complete the calculation to determine the amount. (Use a minus sign or parentheses for a lo Trade in value of old truck Book value Gain (Loss) on exchange 270000 249550 20450 Requirement 2. Prepare the journal entry to record the trade-in of the old truck on the new one. Use two decimal places for depreciation cost per mile. (Record debits first, Journal Entry Date Accounts Depreciation Expense Accumulated Depreciation-Mack Truck Accumulated Depreciation-Mack Truck Truck-Freightliner Gain on Exchange of Mack Truck Cash || Debit 14400 170450 270000 Credit 14400 20450 31000 More info When this truck was acquired in 2021, the tractor-trailer rig had cost $420,000 and was expected to remain in service for 10 years or 1,000,000 miles. Its estimated residual value was $100,000. During 2021, the truck was driven 77,000 miles; during 2022, 175,000 miles; and during 2023, 190,000 miles. After the truck was driven 45,000 miles in 2024, the company traded in the Mack truck for a Freightliner truck with fair market value of $270,000. In addition to the trade-in of the Mack truck, Concord Truck Company paid cash of $31,000 for the Freightliner truck Requirements. Print Done 1. Determine Concord's gain or loss on the transaction. 2. Prepare the journal entry to record the trade-in of the old truck for the new one. Use two decimal places for depreciation cost per mile. Print Done X - X
Concord Truck Company is a large trucking company. The company uses the units-of-production (UOP) method to depreciate its trucks. To follow are facts about one Mack truck in the company's fleet. (Click the icon to view the facts.) Read the requirements. Requirement 1. Determine Concord's gain or loss on the transaction. Begin by determining the formula needed to calculate the gain or loss and then complete the calculation to determine the amount. (Use a minus sign or parentheses for a lo Trade in value of old truck Book value Gain (Loss) on exchange 270000 249550 20450 Requirement 2. Prepare the journal entry to record the trade-in of the old truck on the new one. Use two decimal places for depreciation cost per mile. (Record debits first, Journal Entry Date Accounts Depreciation Expense Accumulated Depreciation-Mack Truck Accumulated Depreciation-Mack Truck Truck-Freightliner Gain on Exchange of Mack Truck Cash || Debit 14400 170450 270000 Credit 14400 20450 31000 More info When this truck was acquired in 2021, the tractor-trailer rig had cost $420,000 and was expected to remain in service for 10 years or 1,000,000 miles. Its estimated residual value was $100,000. During 2021, the truck was driven 77,000 miles; during 2022, 175,000 miles; and during 2023, 190,000 miles. After the truck was driven 45,000 miles in 2024, the company traded in the Mack truck for a Freightliner truck with fair market value of $270,000. In addition to the trade-in of the Mack truck, Concord Truck Company paid cash of $31,000 for the Freightliner truck Requirements. Print Done 1. Determine Concord's gain or loss on the transaction. 2. Prepare the journal entry to record the trade-in of the old truck for the new one. Use two decimal places for depreciation cost per mile. Print Done X - X
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
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Transcribed Image Text:Concord Truck Company is a large trucking company. The company uses the units-of-production (UOP) method to depreciate its trucks. To follow are facts about one Mack truck in the company's fleet.
i (Click the icon to view the facts.)
Read the requirements.
Requirement 1. Determine Concord's gain or loss on the transaction.
Begin by determining the formula needed to calculate the gain or loss and then complete the calculation to determine the amount. (Use a minus sign or parentheses for a lo
Trade in value of old truck
Gain (Loss) on exchange
Book value
Date
270000
Accounts
249550
Requirement 2. Prepare the journal entry to record the trade-in of the old truck on the new one. Use two decimal places for depreciation cost per mile. (Record debits first,
Journal Entry
Depreciation Expense
Accumulated Depreciation-Mack Truck
Accumulated Depreciation-Mack Truck
Truck-Freightliner
Gain on Exchange of Mack Truck
Cash
=
Debit
14400
170450
270000
Credit
14400
20450
20450
31000
More info
When this truck was acquired in 2021, the tractor-trailer rig had cost $420,000 and
was expected to remain in service for 10 years or 1,000,000 miles. Its estimated
residual value was $100,000. During 2021, the truck was driven 77,000 miles;
during 2022, 175,000 miles; and during 2023, 190,000 miles. After the truck was
driven 45,000 miles in 2024, the company traded in the Mack truck for a
Freightliner truck with fair market value of $270,000. In addition to the trade-in of
the Mack truck, Concord Truck Company paid cash of $31,000 for the Freightliner
truck.
Requirements.
Print
Done
1. Determine Concord's gain or loss on the transaction.
2. Prepare the journal entry to record the trade-in of the old truck for the new
one. Use two decimal places for depreciation cost per mile.
Print
Done
X
X
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