Asked by A Breath of Mahek on Jun 21, 2024
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A company exchanged its used machine for a new machine in a transaction that had commercial substance.The old machine cost $68,000,and the new one had a cash price of $95,000.The company had taken $59,000 depreciation on the old machine and was allowed a $2,500 trade-in allowance and the balance of $92,500 was paid in cash.What gain or loss should be recorded on the exchange?
Commercial Substance
An occurrence in a transaction where the future cash flows or the economic circumstances of the involved parties change as a result.
Trade-In Allowance
The discount or credit granted for the return of an old item when purchasing a new one.
Depreciation
The allocation of the cost of a tangible asset over its useful life, representing the decrease in value due to wear and tear, age, or obsolescence.
- Log the dealings of similar and dissimilar assets which hold commercial significance.
- Construct entries in the general journal to capture transactions concerning plant assets.
Verified Answer
MS
Learning Objectives
- Log the dealings of similar and dissimilar assets which hold commercial significance.
- Construct entries in the general journal to capture transactions concerning plant assets.