Question

A company bought new heating system for $52,000 and was given a trade-in of $2,200 on an old heating system, so the company paid $49,800 cash with the trade-in. The old system had an original cost of $46,400 and accumulated depreciation of $42,600. If the transaction has commercial substance, the company should record the new heating system at_______.

Answer 1

price of new heating system is = $53, 600

Step-by-step explanation:

Given data:

Cost of new heating system is $52000

trade in of fro old machine is $2200

so company paid = 52000 - 2200 = $49800

old machine value = 46400 - 42600 = $ 3800

Book value for old machine is 3800 but in trade in it sold for 2200, therefore loss is = 3800 - 2200 = 1600

price of new heating system is = 52000 + 1600 = $53, 600