Question

When a company sells its delivery truck, it must ______. Multiple choice question. reduce the truck account by the net book value of the asset not record any depreciation expense in the year of the sale record a loss when the book value of the truck is less than the cash received reduce both the truck account by the original cost and the related accumulated depreciation

Answer 1

When a company sells its delivery truck, it must reduce both the delivery truck account by the original cost and related accumulated depreciation.

It should be noted that a delivery truck is an asset. An asset is a resource that is owned by the business. It should be noted that when a truck is bought and used, after some time, the value depreciates.

Accumulated depreciation is a contra asset account on the balance sheet of a company. Therefore, when a company sells its delivery truck, it must reduce both the delivery truck account by the original cost and related accumulated depreciation.

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