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On January 1, 20X3, O’Neil Company buys equipment for $70,000 with a ten-year life and a $10,000 expected residual value. Depreciation is applied using the double-declining balance method. The half-year convention is not being used. On April 1, 20X5, when this equipment is worth $44,000, it is traded for a truck that is worth $74,000. O’Neil pays $30,000 in cash to make up the difference. What gain or loss is recognized on this exchange? $1,440 gain $2,200 gain $1,000 loss $1,000 gain $2,440 loss

On January 1, 20X3, O’Neil Company buys equipment for $70,000 with a ten-year life and a $10,000 expected residual value. Depreciation is applied using the double-declining balance method. The half-year convention is not being used. On April 1, 20X5, when this equipment is worth $44,000, it is traded for a truck that is worth $74,000. O’Neil pays $30,000 in cash to make up the difference. What gain or loss is recognized on this exchange? $1,440 gain $2,200 gain $1,000 loss $1,000 gain $2,440 loss

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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On January 1, 20X3, O’Neil Company buys equipment for $70,000 with a ten-year life and a $10,000 expected residual value. Depreciation is applied using the double-declining balance method. The half-year convention is not being used. On April 1, 20X5, when this equipment is worth $44,000, it is traded for a truck that is worth $74,000. O’Neil pays $30,000 in cash to make up the difference. What gain or loss is recognized on this exchange?

$1,440 gain

$2,200 gain

$1,000 loss

$1,000 gain

$2,440 loss

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