Question

On December 1, 2020, Concord Corporation acquired new equipment in exchange for old equipment that it had acquired in 2017. The old equipment was purchased for $216000 and had a book value of $83720. On the date of the exchange, the old equipment had a fair value of $91000. In addition, Concord paid $286000 cash for the new equipment, which had a list price of $386000. The exchange lacked commercial substance. At what amount should Concord record the new equipment for financial accounting purposes?

Answer 1

$369,720

Step-by-step explanation:

The computation of the amount record the new equipment for financial accounting purpose is shown below:

Book value of new equipment = book value of old equipment + cash given

where,

Book value of old equipment is $83,720

And, the cash paid for new equipment is $286,000

SO, the book value of new equipment is

= $83,720 + $286,000

= $369,720