A truck that cost $250 000 and had accumulated depreciation of $180 000 was sold for $50 000 cash in June 2017.This transaction will:

Question

Quizplus · Accepted Answer

When the truck was sold for $50,000, it had a carrying amount (cost minus accumulated depreciation) of $70,000 ($250,000 - $180,000). Therefore, the sale resulted in a loss of $20,000 ($70,000 - $50,000), which will decrease profits. Additionally, since the truck was sold for cash, the asset of $50,000 in cash will increase, but the asset of the truck will decrease, resulting in a net decrease in assets. Hence, option C is the correct choice.

A Truck That Cost $250 000 and Had Accumulated Depreciation