Question

A company purchased equipment valued at $120,000. It traded in old equipment for a $95,000 trade-in allowance and the company paid $25,000 cash with the trade-in. The old equipment cost $110,000 and had accumulated depreciation of $33,000. This transaction has commercial substance. What is the recorded value of the new equipment

Answer 1

Answer:

$120,000

Explanation:

Data provided in the question

Purchase value of an equipment = $120,000

Trade in allowance = $95,000

Paid cash = $25,000

Cost of an old equipment = $110,000

Accumulated depreciation = $33,000

So by considering the above situation, the recorded value of the equipment is $120,000 as the cash is paid for $25,000 and the trade in allowance is $95,000

So it would be equal to the purchase value i.e $120,000