Asked by Natacha Guerrero on Jun 13, 2024
Verified
A company bought new heating system for $42,000 and was given a trade-in of $2,000 on an old heating system,so the company paid $40,000 cash with the trade-in.The old system had an original cost of $37,000 and accumulated depreciation of $34,000.If the transaction has commercial substance,the company should record the new heating system at:
A) $2,000.
B) $3,000.
C) $40,000.
D) $42,000.
E) $43,000.
Trade-in
An asset given as part-payment for the purchase of a new asset, usually in the context of vehicles.
Commercial Substance
A situation where the future cash flows of an entity change as a result of a transaction, indicating the transaction has economic significance.
Original Cost
The initial purchase price or construction cost of an asset or investment, before depreciation or amortization.
- Calculate and record the expense related to the acquisition and disposal of plant assets.
Verified Answer
Learning Objectives
- Calculate and record the expense related to the acquisition and disposal of plant assets.
Related questions
The Book Value of the Machine at the End of ...
Victory Company Purchases Office Equipment at the Beginning of the ...
Granite Company Purchased a Machine Costing $120,000,terms 1/10,n/30 ...
Gaston Owns Equipment That Cost $90,500 with Accumulated Depreciation of ...
If Fully Depreciated Equipment That Cost $10000 with No Salvage ...