Asked by Hanna Jordan on Apr 25, 2024
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A company purchased store equipment for $4,300 by trading in old equipment with a cost of $2,000 and that had accumulated depreciation of $1,900 as of the exchange date.The company received a $75 trade-in allowance for the old equipment with the balance of $4,225 paid in cash.Prepare the journal entry to record the exchange,assuming the transaction had commercial substance.
Trade-In Allowance
The value that a dealer offers to a customer for the customer's used item (e.g., car) when purchasing a new item.
Accumulated Depreciation
The total depreciation for a fixed asset that has been charged to expense since the asset was acquired and made available for use.
Commercial Substance
A concept in accounting that indicates a transaction significantly alters the economic position or cash flows of an entity.
- Document exchanges of both similar and dissimilar assets that possess commercial value.
- Develop general journal entries for documenting transactions related to plant assets.
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Learning Objectives
- Document exchanges of both similar and dissimilar assets that possess commercial value.
- Develop general journal entries for documenting transactions related to plant assets.