Swann Company sold a delivery truck on April 1, 2019. Swann had acquired the truck on January 1, 2015, for $42,000. At acquisition, Swann had estimated that the truck would have an estimated life of 5 years and a residual value of $5,000. At December 31, 2018, the truck had a book value of $12,400. Required: 1. Prepare any necessary journal entries to record the sale of the truck, assuming it sold for:. a. $12,000 b. $9,000 2. How should the gain or loss on disposal be reported on the income statement? 3. Assume that Swann uses IFRS and sold the truck for $12,000. In addition, Swann had previously recorded a revaluation surplus related to this machine of $4,000. What journal entries are required to record the sale?

First we must record the depreciation expense for January, February and March:

Depreciation expense for 3 months = ($42,000 - $5,000) x 3/60 = $1,850

April 1, depreciation expense for January, February and March:

Dr Depreciation Expense 1,850

    Cr Accumulated depreciation 1,850

the book value of the truck = $12,400 - $1,850 = $10,550

1) If the truck was sold at $12,000:

April 1, truck is sold at $12,000

Dr Cash 12,000

Dr Accumulated depreciation 31,450

    Cr Gain from sale 1,450

    Cr Truck 42,000

If the truck was sold at $9,000:

April 1, truck is sold at $9,000

Dr Cash 9,000

Dr Accumulated depreciation 31,450

Dr Loss from sale 1,550

    Cr Truck 42,000

2) The gain or loss resulting from the disposal of the truck must be included in the income statement under gain/loss from sale of assets.

3) If Swann uses IFRS and had recorded a revaluation surplus on the truck:

April 1, truck is sold at $12,000

Dr Cash 12,000

Dr Revaluation surplus 4,000

Dr Loss from sale 1,450

    Cr Truck 14,550

answer; ///deficit;