Rupert Company purchased a delivery van on January 1, Year 1 for $45,000. Rupert uses the straight-line method for the asset, which has a five-year estimated useful life and a salvage value estimated at $9,000. On January 1, Year 3, the asset was sold for $33,300 cash. Indicate whether each of the following items related to Rupert Company is true or false.a)Annual depreciation for Rupert's equipment was $9,000.b)Accumulated depreciation at end of Year 2 was $14,400.c)Book value at end of Year 2 was $30,600.d)On the date of the sale, Rupert will record a loss of $2,400.e)A gain or loss on the sale of a plant asset is reported on the balance sheet.

Question

Quizplus · Accepted Answer

b)True c)True d)False e)Fa)This is false. Annual depreciation = ($45,000 − $9,000 salvage)÷ 5 years = $7,200b)This is true. Accumulated depreciation at end of Year 2 = 2 years × $7,200 annual depreciation = $14,400c)This is true. Book value at end of Year 2 = Cost of $45,000 cost − Accumulated depreciation of $14,400 = $30,600d)This is false. Proceeds from sale of $33,300 price − Book value of $30,600 = Gain on sale of $2,700e)This is false. Gains and losses are reported on the income statement (rather than on the balance sheet).

Rupert Company Purchased a Delivery Van on January 1, Year