Answer:
Gain of $1000
Explanation:
Looking at the question, it is evident that the company is using the accrual basis of accounting, hence the reporting should be done simply by showing a revenue of $5000(Proceeds) minus the carrying value given i.e. $4000.
Hence a gain of $1000.
Hope this helps you. Good Luck.
Answer:
Income Statement
Non- Operating Income Section
Increase Profit On Sale of Non-Current assets with $ 1000
Statement of Financial Position
Non-Current Assets Section
Decrease Vehicle Costs with $6,000
Decrease Accumulated Depreciation on Vehicles with $2,000
Current Assets Section
Increase Cash Balances with $5,000
Explanation:
Vann County has just disposed of its Vehicles and the transaction must be treated as a disposal of a non-current Asset.
The Journal entry to Record the disposal is shown as follows:
Cash $5,000 (debit)
Accumulated Depreciation $2,000 (debit)
Profit On Sale of Vehicles $ 1000 (credit)
Vehicles $6,000 (credit)
Thus a Profit on Disposal of $1,000 has been made
