City Taxi Service purchased a new auto to use as a taxi on January 1, 2018, for

Question

City Taxi Service purchased a new auto to use as a taxi on January 1, 2018, for $36,000. In addition, City paid sales tax and title fees of $1,200 for the vehicle. The taxi is expected to have a five-year life and a salvage value of $4,000.

Using the straight-line method, compute the depreciation expense for 2018 and 2019.

Assume the van was sold on January 1, 2020, for $21,000. Determine the amount of gain or loss that would be recognized on the asset disposal. (Amounts to be deducted should be indicated with minus sign.)

cant get the lost correcy

a. 2018 Depreciation $6,640 per year 2019 Depreciation $6,640 per year b. Loss on sale $23,720

Explanation / Answer

Straight line dep = (36000+1200-4000) /5 =6640 per year

Accumlated depreciaton for 2018 & 2019 = (6640*2) = 13280

Book value on sale date = (36000-13280) = 22720

Sale value = 21000

Loss on sale = 21000-22720 = 1720

a. 2018 Depreciation $6,640 per year 2019 Depreciation $6,640 per year b. Loss on sale $1,720

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