A firm trades in an old machine with a carrying value of $20,000 for new machine that has a list price of $32,000 and a fair value of $33,000. The old machine was acquired 5 years ago at a cost of $40,000. At what value will the firm record the new machine?
A) $20,000
B) $33,000
C) $40,000
D) $32,000

Question

Quizplus · Accepted Answer

The new machine should be recorded at its fair value of $33,000, as it is the most reliable measure of the asset's value in this exchange.

A Firm Trades in an Old Machine with a Carrying