Problem:
On January 1, 2004, Skyline Limousine Co. purchased a limousine at an acquisition cost of $28,000. Skyline depreciated the vehicle by the straight-line method using a 4-year service life and a $4,000 salvage value. The company's fiscal year ends on December 31.
Instructions:
Explain what you found to be the most challenging part of the problems? Explain why:
When you are Prepare the journal entry or entries to record the disposal of the limousine assuming that it was.
a. Retired and scrapped with no salvage value on January 1, 2008.
b. Sold for $5,000 on July 1, 2007