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Cowboy Ice Cream Company (CIC) purchased a new Ice Cream Truck to use in the retail division on January 1, Year 1, for $20,300. In addition, CIC paid sales tax and title fees of $1,080 for the vehicle. The truck is expected to have a five-year life and a salvage value of $5,180. Required

Cowboy Ice Cream Company (CIC) purchased a new Ice Cream Truck to use in the retail division on January 1, Year 1, for $20,300. In addition, CIC paid sales tax and title fees of $1,080 for the vehicle. The truck is expected to have a five-year life and a salvage value of $5,180. Required

FINANCIAL ACCOUNTING
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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Cowboy Ice Cream Company (CIC) purchased a new Ice Cream Truck to use in the retail division on January 1, Year 1, for $20,300. In addition, CIC paid sales tax and title fees of $1,080 for the vehicle. The truck is expected to have a five-year life and a salvage value of $5,180. Required a. Using the straight-line method, compute the depreciation expense for Year 1 and Year 2. (Round your answers to the nearest whole dollar amount.) b. Assume the truck was sold on January 1, Year 3, for $17,135. Determine the amount of gain or loss that would be recognized on the asset disposal. (Round the intermediate calculations to nearest whole dollar amount.) a. Year 1 Depreciation per year Year 2 Depreciation per year b. on sale
Transcribed Image Text:Cowboy Ice Cream Company (CIC) purchased a new Ice Cream Truck to use in the retail division on January 1, Year 1, for $20,300. In addition, CIC paid sales tax and title fees of $1,080 for the vehicle. The truck is expected to have a five-year life and a salvage value of $5,180. Required a. Using the straight-line method, compute the depreciation expense for Year 1 and Year 2. (Round your answers to the nearest whole dollar amount.) b. Assume the truck was sold on January 1, Year 3, for $17,135. Determine the amount of gain or loss that would be recognized on the asset disposal. (Round the intermediate calculations to nearest whole dollar amount.) a. Year 1 Depreciation per year Year 2 Depreciation per year b. on sale
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