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A company purchased equipment valued at $243,000. It traded in old equipment for a $180,000 trade-in allowance and the company paid $63,000 cash with the trade-in. The old equipment cost $220,000 and had accumulated depreciation of $44,000. This transaction has commercial substance. What is the recorded value of the new equipment

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anthougo

Answer:

The recorded value of the new equipment is:

$239,000

Explanation:

Value of new equipment = $243,000

Trade-in Allowance = $180,000

Cash payment = $63,000

Value of old equipment:

Cost of old equipment = $220,000

Accumulated depreciation = $44,000

Book value = $176,000

Trade-in Gain = $4,000 ($180,000 - $176,000)

Recorded Value of new equipment:

Value of new equipment = $243,000

less Trade-in Gain                     4,000

Recorded value =               $239,000

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