A truck that cost $12,000 and on which $9,000 of accumulated depreciation has been recorded was disposed of on January 1.If the truck was discarded as having no value,the entry to record this event includes
A)a gain of $3,000.
B)a loss of $3,000.
C)a loss of $6,000.
D)no recognition of a gain or loss.

Question

Quizplus · Accepted Answer

When a fixed asset is disposed of, the entry must reflect the cost of the asset and the accumulated depreciation to date. In this case, the cost of the truck was $12,000 and the accumulated depreciation was $9,000, so the book value of the truck was $3,000. If the truck was discarded as having no value, it means that the disposal proceeds were $0, so there would be a loss of $3,000 ($3,000 book value - $0 disposal proceeds = $3,000 loss). Therefore, the entry to record this event would include a debit to Accumulated Depreciation for $9,000, a debit to Loss on Disposal for $3,000, and a credit to Truck for $12,000.

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