A company's old machine that cost $47,000 and had accumulated depreciation of $36,300 was traded...
Question:
A company's old machine that cost $47,000 and had accumulated depreciation of $36,300 was traded in on a new machine having an estimated 20-year life with an invoice price of $57,700. The company also paid $49,300 cash, along with its old machine to acquire the new machine. If this transaction has commercial substance, the new machine should be recorded at:
A. $10,700.
B. $60,000.
C. $55,400.
D. $47,000.
E. $57,700.
Recording Long-Term Assets:
Long-term assets such as equipment, machinery, plant, and property are usually recorded at historical cost on the balance sheet under the non-current assets section. A contra-asset account is also shown in this section to represent the accumulated depreciation.
Answer and Explanation: 1
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View this answerThe new machine will be recorded at the total consideration given and that is the book value of the old machine plus the amount of cash paid by the...
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