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Calculate the gain or loss obtained for the sale of truck

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Reference no: EM132802338

On 1st of January 2018 Blink Ld. purchased a new truck to be used for the delivery of the merchandises produced by the company.

  • The price paid was $175,000. The residual value of the truck was estimated to $5,000 and the useful life to 9 years.
  • On 31st of December 2020 the company sold the truck for $107,000.
  • On 31st of December, Blink, Ltd obtained a 18 months loan from the bank for $200,000. Interest rate is 6%. The company will face monthly installment payments of $2,000 as from January 1st 2020.

Problem 1: Calculate the gain or loss obtained for the sale of the truck considering that the company used the straight-line depreciation method.

Problem 2: Calculate the gain or loss obtained for the sale of the truck considering that the company used the double declining balance method for depreciation purposes. Explain your calculation and the steps followed.

Problem 3: Calculate the remaining unpaid balance of the loan at 28th of February 2021. Explain your calculation.

Reference no: EM132802338

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