A truck costing $12,000 and on which $9,000 of accumulated amortization has been recorded was disposed of for $2,000 cash.The entry to record this event would include a:
A)gain of $1,000.
B)loss of $1,000.
C)credit to the Truck account for $3,000.
D)credit to Accumulated amortization for $9,000.

Question

Quizplus · Accepted Answer

The book value of the truck is calculated by subtracting the accumulated amortization from the cost of the truck: $12,000 - $9,000 = $3,000. Since the truck was sold for $2,000, the company incurred a loss of $1,000 ($2,000 - $3,000 = -$1,000). Therefore, the entry should include a debit to Cash for $2,000, a credit to Truck for $12,000, a credit to Accumulated amortization for $9,000, and a loss on disposal of $1,000.

A Truck Costing $12,000 and on Which $9,000 of Accumulated