Reference no: EM133170422

Question - Computing Depreciation, Net Book Value, and Gain or Loss on Asset Sale - Lynch Company owns and operates a delivery van that originally cost $51,500. Lynch has recorded straight-line depreciation on the van for four years, calculated assuming a $5,000 expected salvage value at the end of its estimated six-year useful life. Depreciation was last recorded at the end of the fourth year, at which time Lynch disposes of this van.

Required -

a. Compute the net book value of the van on the disposal date.

b. Compute the gain or loss on sale of the van if the disposal proceeds are:

1. A cash amount equal to the van's net book value.

2. $22,400 cash.

3. $18,400 cash.