CJ’s Pizza purchased a delivery van on January 1, 2012, for $25,000. In addition
ID: 2445533 • Letter: C
Question
CJ’s Pizza purchased a delivery van on January 1, 2012, for $25,000. In addition, CJ’s paid sales tax and title fees of $1,000 for the van. The van is expected to have a four-year life and a salvage value of $6,000. Required: (a) Using the straight-line method, compute the depreciation expense for 2012 and 2013. (Omit the "$" signs in your response.) Cost of delivery van: Van Cost $ 25000 Sales Tax & Title Fees 1000 Total Cost $ 26000 Calculation of Depreciation: Depreciable Cost: $ 20000 Depreciation: $ 5000 per year 2012 Depreciation: $ 5000 2013 Depreciation: $ 5000 (b) Assume the truck was sold on January 1, 2015, for $12,000. Determine the amount of gain or loss that would be recognized on the asset disposal. (Amounts to be deducted and negative amounts should be entered with a minus sign. Omit the "$" signs in your response.) Cost $ 12000 10000 Book Value, 1/1/2015 $ 16000 $ 2000
Explanation / Answer
Cj Pizza Date Details Years/Amt $ A Jan 1. 2012 Purchase cost of Van (25000+1000) 26,000 Less : Expected salvage value (6,000) Depreciable cost 20,000 Useful Life of van years 4 Depreciation per year =Depreciable value/useful life 5,000 So , Depreciation amount for 2012 5,000 So , Depreciation amount for 2013 5,000 B Cost of Van purchased 26,000 Less :Total depreciation till Jan 1 2015.(2012,2013,2014 @5000 each year) (15,000) Book value of van as on Jan 1 2015. 11,000 Sale proceeds of van on Jan 1.2015 12,000 Capital gain on sale 1,000