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13 February, 12:08

A company exchanges its old office equipment and $80,000 for new office equipment. The old office equipment has a book value of $56,000 and a fair value of $40,000 on the date of the exchange. The cost of the new office equipment would be recorded at

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  1. 13 February, 12:11
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    cost of the new office equipment would be recorded at $120,000

    Explanation:

    First of all let us lay out the relevant information:

    Book value of old equipment = $56,000

    Fair value of old equipment = $40,000

    additional exchange fee = $80,000

    Cost of new equipment = Fair value + additional exchange fee

    = 40,000 + 80,000 = $120,000
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