Exchange Intelligent Corporation recently acquired new semiconductor assembly equipment to be...

Question:

Exchange Intelligent Corporation recently acquired new semiconductor assembly equipment to be used in its production process. Intelligent Corporation traded in old semiconductor equipment that had an original cost of $300,000 and accumulated depreciation on the date of the exchange of $225,000. The fair value of the old equipment is $85,000. In addition, Intelligent Corporation signed a promissory note to pay $200,000 in three years plus interest at a market interest rate of 6%.

What is the cost recorded for the new equipment?

What is the gain/(loss) on disposal of the old equipment?

Accumulated Depreciation:

Accumulated Depreciation is the total depreciation from date of assets purchase in other words it is the cumulative depreciation from date of purchase,The accumulated depreciation account has always credit balance and it is deducted from cost of assets

Answer and Explanation: 1

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1)The cost recorded for the new equipment is calculated below:

= Fair value + Notes payable

= $85000+ $200000

=285000

2)The gain/(loss) on...

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Accumulated Depreciation: Definition & Formula

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Chapter 22 / Lesson 15
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Study the accumulated depreciation definition and understand how it works with an example. See how to find accumulated depreciation using the formula.


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