The amount that would be recognized on the asset disposal will be $ -2920.
The financial reporting strategy of declining an asset throughout its useful life is referred to as depreciation. This can be calculated with different methods including straight line as well as declining method.
Straight-line method of depreciation
= (cost of the asset - salvage value) useful life
Price of the asset = 36,000 + $1200 = $37,20
=($37,200 - $4,000) / 5
= $6,640.
Book value = cost of the asset - accumulated depreciation
Accumulated depreciation = $6,640 x 2 = $13,280
Book value = $37,200 - $13,280
= $23,920
Loss on the sale = $21,000 - $23,920
= $ -2920
Therefore, the loss on the sale of assets is $-2920
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The complete question is Probably
City Taxi Service purchased a new auto to use as a taxi on January 1, 2018, for $36,000. In addition, City paid sales tax and title fees of $1,200 for the vehicle. The taxi is expected to have a five-year life and a salvage value of $4,000. Required Using the straight-line method, compute the depreciation expense for 2018 and 2019. Assume the van was sold on January 1, 2020, for $21,000. Determine the amount of gain or loss that would be recognized on the asset disposal. (Amounts to be deducted should be indicated with minus sign.)
