On January 1,2010,Jacob Inc.purchased a commercial truck for $48,000 and uses the straight-line depreciation method.The truck has a useful life of eight years and an estimated residual value of $8,000.On December 31,2012,Jacob Inc.sold the truck for $30,000.What amount of gain or loss should Jacob Inc.record on December 31,2012?

Question

Quizplus · Accepted Answer

To calculate the gain or loss on the sale of the truck, we need to compare the book value (cost less accumulated depreciation) of the truck with the selling price.

Book value on December 31, 2012: 
Cost: $48,000 
Less: Accumulated depreciation (3 years x $5,000 per year): $15,000 
Book value: $33,000

Selling price: $30,000

Since the selling price is less than the book value, there is a loss on the sale:

Book value: $33,000 
Less: Selling price: $30,000 
Loss: $3,000

Therefore, the correct answer is D) Loss, $3,000.