A companys old machine that cost 47000 and had accumulated d

A company\'s old machine that cost $47,000 and had accumulated depreciation of $36,300 was traded in on a new machine le with an invoice price of $57700. The company also paid $49,300 cash, along with its old machine to acquire the new machine. If this transaction has commercial substance, the new machine should be recorded at Muliple Choice $47000 $5.400 $10,700 8 command optin

Solution

1) The Answer is \"$57700\"

Value of Old Machine after Depreciation = Old Machine Value - Depreciation

= $47000 - $36300

= $10700

Total Value of New Machine = Cash Paid + Balance Value of Old Machine

= $49300 + $10700

= $60000

But New Machine Recorded Amount is $57700, because this is fair market value of new machine

2) The Answer is \"1400 Loss\"

Purchase price = $8,300

Accumulated depreciation = $6,900

Book Value on the date when the system was discarded = $1400

Realization on account of discard = Nil

loss on discarding the system = $1400

the company should recognize a loss of $1400.