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Temple Company sold a delivery truck on April 1, 2013. Swann had acquired the truck on January 1,...

Question:

Temple Company sold a delivery truck on April 1, 2013. Swann had acquired the truck on January 1, 2009, for $42,500. At acquisition, Temple had estimated that the truck would have an estimated life of 5 years and a residual value of $5,000. At December 31, 2012, the truck had a book value of $12,500. Temple uses the straight-line method.

Required:

1. Prepare any necessary journal entries to record the sale of the truck, assuming it sold for $12,575.

2. Prepare any necessary journal entries to record the sale of the truck, assuming it sold for $9,375.

3. Assume that Temple uses IFRS and sold the truck for $12,575. In addition, Temple had previously recorded a revaluation surplus related to this machine of $4,600. What journal entries are required to record the sale?

Revaluation account

Revenue account is an Account that records the upward revaluation i.e. appreciation and downward revaluation i.e. depreciation in the value of an asset, whenever that asset is sold at a loss, this account is charged with that loss.

Answer and Explanation: 1

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Part 1)

Journal entry on December 31st 2012

Cash Dr. $12575

Truck Cr. $12500

Gain on sale Cr. $75

( being truck sold)


Part 2)

Cash Dr $9375

...

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How to Account for Asset Disposal

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Chapter 9 / Lesson 10
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This lesson provides an overview on how to account for the disposal of capital assets. Learn about the value of an asset, as well as how to account for asset sales, retirement, and exchanges.


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