Scott Co.'s property, plant, and equipment and accumulated depreciation and amortization balances at December 31, 2005 are as follows:

Cost Accumulated Depreciation

Land $ 125,000 --

Buildings 1,800,000 $ 400,000

Machinery and equipment 1,000,000 280,000

Automobiles and trucks 100,000 50,000

Leasehold improvements 255,000 68,000

Total $3,280,000 $ 798,000

Depreciation and amortization methods and useful lives:

Buildings 125% declining balance; 25 years

Machinery and equipment Straight-line; 20 years

Automobiles and trucks 150% declining balance; five years; all acquired after 2003

Leasehold improvements Straight-line

• Depreciation is computed to the nearest month.
• Salvage values of depreciable assets are immaterial except for automobiles and trucks, which have estimated salvage values equal to 10% of cost.

Other additional information:

• Scott entered into a 15-year operating lease starting January 1, 2002. The leasehold improvements were completed on December 31, 2001 and the facility was occupied on January 1, 2002.

• On January 6, 2006, Scott completed its self-construction of a building on its own land. Direct costs of construction were $2,200,000. Construction of the building required 20,000 direct labor hours. Scott's construction department has an overhead allocation system for outside jobs based on an activity denominator of 200,000 direct labor hours, budgeted fixed costs of $2.8 million, and budgeted variable costs of $29 per direct labor hour.
• On May 5, 2006, machinery and equipment were purchased at a total invoice cost of $393,000. Additional costs of $18,000 to rectify damages on delivery and $15,000 for concrete embedding of machinery were incurred. A wall had to be demolished for a large machine to be moved into the plant. The wall demolition cost $3,500, and rebuilding of the wall cost $8,500.

• On June 30, 2006, a truck with a cost of $56,000 and a carrying amount of $32,000 on December 31, 2005 was sold for $27,750.

• On July 1, 2006, Scott purchased a new automobile for $26,000.

• On October 19, 2006, Scott purchased a tract of land for investment purposes for $600,000. Scott thinks it might use the land as a potential future building site.

• On December 20, 2006, a machine with a cost of $15,000, a carrying amount of $2,700 on date of disposition, and a market value of $3,500 was given to a corporate officer in partial liquidation of a debt.

Required: Using the information above, compute the gain and/or loss that would be incurred on each of the two fixed asset disposition transactions noted in the Analysis of Gains and Losses on Disposition of Property, Plant, and Equipment table below. Enter your numeric response in the appropriate table box. You only need to enter a value in the gain/loss boxes, but each of those boxes must be completed. If there is a gain and not a loss on a particular transaction, then enter the appropriate numeric value in the gain box, and enter a zero in the loss box. Conversely, if there is a loss and not a gain on a particular transaction, then enter the appropriate numeric value in the loss box, and enter a "zero" in the gain box. Do not use brackets to present losses. Instead, present any losses as whole, positive values. Do not use dollar signs and be sure to use commas as appropriate in presenting your numeric responses. For example, if you are entering one million dollars, you would enter it as follows: 1,000,000. Round all computations to the nearest dollar.

Scott Company

ANALYSIS OF GAINS AND LOSSES ON DISPOSITION OF PROPERTY, PLANT, AND EQUIPMENT For the Year Ended December 31, 2006

	Selling Price	Carrying Amount	Gain	Loss
Sale of truck
Machine exchanged for debt