A truck that cost $12,000 and on which $9,000 of accumulated depreciation has been recorded was disposed of on January 1.Assume that the truck was traded for a similar truck having a price of $13,000,that an $1,800 trade-in was allowed,and that the balance was paid in cash.The amount of the gain or loss recognized on this transaction would be
A)a $1,200 loss.
B)a $1,200 gain.
C)a $2,400 loss.
D)no gain or loss recognized.

Question

Quizplus · Accepted Answer

The book value of the old truck is $3,000 ($12,000 cost - $9,000 accumulated depreciation). The trade-in allowance is $1,800, resulting in a loss of $1,200 ($3,000 book value - $1,800 trade-in allowance).

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