Question

Required information The following information applies to the questions displayed below. FedEx Corporation is the world's leading express-distribution company. In addition to its 643 aircraft, the company has more than 57,000 ground vehicles that pick up and deliver packages. Assume that FedEx sold a delivery truck for $16,000. FedEx had originally purchased the truck for $28,000 and had recorded depreciation for three years. 2. Using the following structure, indicate the effects (accounts, amounts, and + for increase and – for decrease) of the disposal of the truck, assuming that Accumulated Depreciation was (a) $12,000, (b) $10,000, and (c) $15,000. (Enter any decreases to Assets, Liabilities, or Stockholders' Equity with a minus sign.) Assets - Liabilities + Stockholders' Equity (a)

Answer 1

FedEx Corporation
Calculation of Gain/loss on disposal
	(a)	(b)	(C)
Cost	28000	28000	28000
Less: Accumulated Depreciation	-12000	-10000	-15000
Book Value	16000	18000	13000
Less: Sales Price	16000	16000	16000
Gain/Loss on disposal	0	-2000	3000
Bok Value=Cost-Accumulated Depreciation
Gain/Loss on disposal-Sales Value of disposal-Book Value
Sale Price> Book Value=Gain,Sales Price< Book Value=Loss
	Assets=	Liabilities+	Stockholder's Equity	Note
a)
Cash	$               16,000.00			Cash Received for sale of Truck
Truck	$             -28,000.00			Truck disposed off
Accumulated Depreciation		$            -12,000.00		When Assets disposed off, corresponding Accumulated depreciation reduced
Loss /Gain on disposal
	$             -12,000.00	$            -12,000.00
	Assets=	Liabilities+	Stockholder's Equity	Note
b)
Cash	$               16,000.00			Cash Received for sale of Truck
Truck	$             -28,000.00			Truck disposed off
Accumulated Depreciation		$            -10,000.00		When Assets disposed off, corresponding Accumulated depreciation reduced
Loss /Gain on disposal			$                           -2,000.00	Stockholder's Equity reduced due to loss on disposal.
	$             -12,000.00	$            -10,000.00	$                           -2,000.00
	Assets=	Liabilities+	Stockholder's Equity	Note
c)
Cash	$               16,000.00			Cash Received for sale of Truck
Truck	$             -28,000.00			Truck disposed off
Accumulated Depreciation		$            -15,000.00		When Assets disposed off, corresponding Accumulated depreciation reduced
Loss /Gain on disposal			$                             3,000.00	Stockholder's Equity will be increased due to gain on disposal.
	$             -12,000.00	$            -15,000.00	$                             3,000.00