A company purchased equipment valued at $259,000. It traded in old equipment for a $114,000 trade-in allowance and the company paid $145,000 cash with the trade-in. The old equipment cost $240,000 and had accumulated depreciation of $144,000. This transaction has commercial substance. What is the recorded value of the new equipment?Multiple Choice$114,000.$259,000.$145,000.$241,000.$96,000.
Question
A company purchased equipment valued at 114,000 trade-in allowance and the company paid 240,000 and had accumulated depreciation of 114,000.145,000.96,000.
Solution
The recorded value of the new equipment is $259,000.
Here's the step-by-step calculation:
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The company traded in old equipment for a 114,000 on the new equipment.
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The company also paid $145,000 cash with the trade-in.
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To find the recorded value of the new equipment, you add the trade-in allowance and the cash paid. So, 145,000 (cash paid) = $259,000.
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Therefore, the recorded value of the new equipment is $259,000.
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