Question

Bacon Company acquired new machinery with a price of $14,299 by trading in similar old machinery and paying $12,869. The old machinery originally cost $8,696 and had accumulated depreciation of $6,957. In recording this transaction, Bacon Company should record

Answer 1

Answer:

Loss of $309.

Explanation:

Bacon company paid $12,869 in cash with an old machinery with a price of $1,739 basis for this new equipment that had a price of $14,199.

Therefore;

Bacon's loss = (Cash paid + Old basis) - Purchase price

= ($12,869 + $1,739) - $14,299

= $14,608 - $14,299

= $309