Question

A company purchased equipment valued at $136,000. It traded in old equipment for a $115,000 trade-in allowance and the company paid $21,000 cash with the trade-in. The old equipment cost $120,000 and had accumulated depreciation of $24,000. This transaction has commercial substance.

What is the recorded value of the new equipment?a. $115,000.b. $21,000.c. $136,000.d. $96,000.e. $117,000.

Answer 1

option c. The recorded value of the new equipment is $136.000

Step-by-step explanation:

Since company is paying cash of $21.000 and company pays $115.000 also.

Recorded value of the new equipment = cash + allowance

the recorded value of the new equipment is $136.000