Five trucks costing $20, 000 each were purchased by the Burns Company at the beginning of 2010.Burns capitalized the trucks in a single asset account and depreciates them using the group method.Each truck was expected to have a residual value of $6, 000 in four years.At the end of 2013, Burns sold one truck for $8, 000.For what amount is accumulated depreciation debited in the journal entry to record the disposal of that truck?

Question

Quizplus · Accepted Answer

The accumulated depreciation for one truck is calculated as follows: Cost of truck ($20,000) - Residual value ($6,000) = Depreciable amount ($14,000). Depreciation per year = $14,000 / 4 = $3,500. Over four years, accumulated depreciation is $3,500 * 4 = $14,000. However, since the truck was sold at the end of 2013, it was depreciated for four years, so the accumulated depreciation is $14,000. But since the truck was sold for $8,000, the accumulated depreciation debited is $20,000 (cost) - $8,000 (sale price) = $12,000.

Five Trucks Costing $20, 000 Each Were Purchased by the Burns