A fixed asset with a cost of $52,000 and accumulated depreciation of $47,500 is traded for a similar asset priced at $60,000 (fair market value) in a transaction with commercial substance. Assuming a trade-in allowance of $5,000, at what cost will the new equipment be recorded in the books?
A) $54,000
B) $59,500
C) $60,000
D) $60,500

Question

Quizplus · Accepted Answer

In a transaction with commercial substance, the new asset is recorded at its fair market value, which is $60,000. The trade-in allowance does not affect the recording cost of the new asset.

A Fixed Asset with a Cost of $52,000 and Accumulated