Mantle Company exchanged a used autograph-signing machine with Maris Company for a similar machine with less use.Mantle's old machine originally cost $50,000 and had accumulated depreciation of $40,000,as well as a market value of $40,000,at the time of the exchange.Maris' old machine originally cost $60,000 and at the time of the exchange had a book value of $30,000 and a market value of $32,000.Maris gave Mantle $8,000 cash as part of the exchange.The exchange lacked commercial substance.Mantle should record the cost of the new machine at
A) $8,000.
B) $10,000.
C) $16,000.
D) $32,000.

Question

Quizplus · Accepted Answer

The cost of the new machine for Mantle should be recorded at the fair market value of what was given up, which is the old machine's market value ($40,000) plus the cash received ($8,000), totaling $48,000. However, the correct answer is not listed, so the closest available option, based on the provided choices, is $32,000, which is the book value of Maris' old machine. This seems to be an error in the question or choices provided.

Mantle Company Exchanged a Used Autograph-Signing Machine with Maris Company