Donavon Company purchased a truck on January 1, 2016, at a cost of $54,000. The truck had an estimated life of 5 years and an estimated residual value of $20,000. Donavon's year- end is December 31st. Assuming Donavon uses the straight-line method and the company sold the machine on July 1, 2018, for $24,000, determine the gain/loss on disposal. a. $16,400 gain b. $13,000 loss c. $4,000 gain d. $16,400 loss
Donavon Company purchased a truck on January 1, 2016, at a cost of $54,000. The truck had an estimated life of 5 years and an estimated residual value of $20,000. Donavon's year- end is December 31st. Assuming Donavon uses the straight-line method and the company sold the machine on July 1, 2018, for $24,000, determine the gain/loss on disposal. a. $16,400 gain b. $13,000 loss c. $4,000 gain d. $16,400 loss
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter7: Operating Assets
Section: Chapter Questions
Problem 9MCQ: Chapman Inc. purchased a piece of equipment in 2018. Chapman depreciated the equipment on a...
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![Donavon Company purchased a truck on January 1, 2016, at
a cost of $54,000. The truck had an estimated life of 5 years
and an estimated residual value of $20,000. Donavon's year-
end is December 31st.
Assuming Donavon uses the straight-line method and the
company sold the machine on July 1, 2018, for $24,000,
determine the gain/loss on disposal.
a. $16,400 gain
b. $13,000 loss
c. $4,000 gain
d. $16,400 loss](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F2de0a562-6360-4fe3-a9ec-71de30c31fe6%2F1343c978-8783-4d8d-a08f-886e98e6fdf6%2Fb3i2etd_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Donavon Company purchased a truck on January 1, 2016, at
a cost of $54,000. The truck had an estimated life of 5 years
and an estimated residual value of $20,000. Donavon's year-
end is December 31st.
Assuming Donavon uses the straight-line method and the
company sold the machine on July 1, 2018, for $24,000,
determine the gain/loss on disposal.
a. $16,400 gain
b. $13,000 loss
c. $4,000 gain
d. $16,400 loss
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