Craig Inc. purchased a truck on January 1, 2015 for $40,000. The truck had an estimated life of six years and an estimated salvage value of $4,000. Craig uses the straight-line method to depreciate the asset. On July 1, 2017, the truck was sold for $14,000 cash.
A. Determine the effect on the accounting equation upon recording the depreciation for 2015.
B. Show how the gain or loss on the sale of the asset would be reported on Craig Inc.'s income
statement.

Question

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The Answer of Craig Inc. purchased a truck on January 1, 2015 for $40,000. The truck had an estimated life of six years and an estimated salvage value of $4,000. Craig uses the straight-line method to depreciate the asset. On July 1, 2017, the truck was sold for $14,000 cash.
A. Determine the effect on the accounting equation upon recording the depreciation for 2015.
B. Show how the gain or loss on the sale of the asset would be reported on Craig Inc.'s income
statement.

Craig Inc Purchased a Truck on January 1, 2015 for $40,000