answer:
To find the original cost of the old machine, we need to consider the gain on disposal, the fair value of the old machine, the cash paid for the new machine, and the accumulated depreciation of the old machine.
The gain on disposal is $2,000, which means that the company made a profit of $2,000 when trading in the old machine.
The fair value of the old machine is $10,000, which represents the estimated worth of the old machine at the time of disposal.
The cash paid for the new machine is $32,000, which is the amount of money the company spent to acquire the new machine.
The accumulated depreciation of the old machine is $22,000, which represents the total depreciation that has been recorded for the old machine over its useful life.
To find the original cost of the old machine, we can use the following formula:
Original cost = Fair value + Accumulated depreciation
Substituting the given values:
Original cost = $10,000 + $22,000
Original cost = $32,000
Therefore, the original cost of the old machine is $32,000.
In summary, the original cost of the old machine is $32,000.
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