Berning Company purchased a tractor at a cost of $180,000. The tractor has an estimated salvage value of $20,000 and an estimated life of 8 years, or 10,000 hours of operation. The tractor was purchased on January 1, 2016 and was used 2,400 hours in 2016 and 2,100 hours in 2017. On January 1, 2018, the company decided to sell the tractor for $70,000. Berning uses the units-of-production method to account for the depreciation on the tractor. Based on this information, the entry to record the sale of the tractor will show:

Select one:

A. A loss of $38,000

B. A gain of $70,000

C. A loss of $70,000

D. No gain or loss on the sale

A. A loss of $38,000

Explanation:

Total depreciation on the tractor = (180,000 - 20,000) *  (2,400 + 2,100) / 10,000 = $72,000

Net book value on January 1, 2018 = 180,000 - 72,000 = $108,000

Loss on sale = 70,000 - 108,000 = $38,000

two years ago, when picking flowers in the mountains back of yosemite valley, i found a book. it was blotted and storm-beaten; all of its outer pages were mealy and crumbly. the paper seemed to dissolve like the snow beneath which it had been buried, however; many of the inner pages were well preserved. and although all were more or less stained and torn, whole chapters were easily readable. this is the condition of the great open book of yosemite glaciers today; its granite pages have been torn and blurred by the same storms that wasted the castaway book.

two years ago, when picking flowers in the mountains back of yosemite valley; i found a book. it was blotted and storm-beaten, all of its outer pages were mealy and crumbly. the paper seemed to dissolve like the snow beneath which it had been buried, however, many of the inner pages were well preserved. and although all were more or less stained and torn; whole chapters were easily readable. this is the condition of the great open book of yosemite glaciers today, its granite pages have been torn and blurred by the same storms that wasted the castaway book.