Business Plumbing Law Practice Exam

To determine the correct accounting entry for a fully depreciated truck that was sold, we start by understanding the truck's original value, salvage value, and the conditions of the sale.

The truck was originally valued at $30,000 with a salvage value of $5,000. Fully depreciating an asset means that its accumulated depreciation equals the depreciable amount, which in this case is the original value minus the salvage value. The depreciable amount is $30,000 - $5,000 = $25,000.

Since the truck is fully depreciated, its book value at the time of sale is effectively the salvage value, which in this example is $5,000. Therefore, selling the truck for $8,000 means selling it for more than its book value.

To calculate the gain on the sale:

- Selling Price: $8,000

- Book Value: $5,000

- Gain on Sale = Selling Price - Book Value = $8,000 - $5,000 = $3,000

The result indicates that there is a gain of $3,000 on the sale of the truck. Given the choices provided, the correct answer is indeed a gain of $3,000, but