On january 1, 2018, jacob inc. purchased a commercial truck for $48,000 and uses the straight-line depreciation method. the truck has a useful life of eight years and an estimated residual value of $8,000. assume the truck was totaled in an accident on december 31, 2019. what amount of gain or loss should jacob inc. record on december 31, 2019?
a. loss, $38,000.
b. loss, $18,000.
c. loss, $3,000.
d. gain, $5,000.

A.Loss, $38,000.

Explanation:

48,000 acquisition valie 8,000 salvage value

subject to depreciaiton 40,000

useful life 8 years

depreciaiton per year:

(40,000) / 8 = 5,000

At december 2019

It has 2 complete year depreciation:

5,000 x 2 = 10,000

book value: 48,000 - 10,000 = 38,000

This amount will be declared as loss as the truck was totaled in he accident.

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