A Company Using the Group Depreciation Method for Its Delivery

question 63

Multiple Choice

A company using the group depreciation method for its delivery trucks retired one of the trucks after the average service life of the group was reached.Cash proceeds were received from a salvage company.The net carrying amount of these group asset accounts would be decreased by the

• A) original cost of the truck.
• B) original cost of the truck less the cash proceeds.
• C) cash proceeds received.
• D) cash proceeds received and original cost of the truck.

---

Definitions:

Loss on Disposal

The financial loss recognized when the selling price of an asset is less than its carrying amount on the balance sheet.

Operating Expenses

Expenses incurred in the normal operations of a business, including costs such as rent, salaries, and utilities, but not including cost of goods sold.

Operating Revenues

Income generated from a company's primary business activities, excluding income from investments or secondary operations.

Interest Expense

The financial liability incurred from borrowing funds that an entity faces over a predetermined period.