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P Company's fiscal year runs from January to December 31. P Company acquires a new truck on October 1, 2013 at a total cost of $360,000 with an estimated useful life of four years and estimated salvage value of $40,000. P Company receives an offer for the truck for $140,000 at the end of 2015. a) What factors should P Company consider in determining whether to sell or keep the truck? b) Assume the truck is sold. Prepare the appropriate journal entries showing the sale of the truck under straight line depreciation method.

P Company's fiscal year runs from January to December 31. P Company acquires a new truck on October 1, 2013 at a total cost of $360,000 with an estimated useful life of four years and estimated salvage value of $40,000. P Company receives an offer for the truck for $140,000 at the end of 2015. a) What factors should P Company consider in determining whether to sell or keep the truck? b) Assume the truck is sold. Prepare the appropriate journal entries showing the sale of the truck under straight line depreciation method.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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P Company's fiscal year runs from January to December 31. P Company acquires a new truck on October 1, 2013 at a total cost of $360,000 with an estimated useful life of four years and estimated salvage value of $40,000. P Company receives an offer for the truck for $140,000 at the end of 2015. a) What factors should P Company consider in determining whether to sell or keep the truck? b) Assume the truck is sold. Prepare the appropriate journal entries showing the sale of the truck under straight line depreciation method.
Transcribed Image Text:P Company's fiscal year runs from January to December 31. P Company acquires a new truck on October 1, 2013 at a total cost of $360,000 with an estimated useful life of four years and estimated salvage value of $40,000. P Company receives an offer for the truck for $140,000 at the end of 2015. a) What factors should P Company consider in determining whether to sell or keep the truck? b) Assume the truck is sold. Prepare the appropriate journal entries showing the sale of the truck under straight line depreciation method.
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