A Company Exchanged Its Used Machine for a New Machine

question 62

Essay

A company exchanged its used machine for a new machine in a transaction that had commercial substance.The old machine cost $68,000,and the new one had a cash price of $95,000.The company had taken $59,000 depreciation on the old machine and was allowed a $2,500 trade-in allowance and the balance of $92,500 was paid in cash.What gain or loss should be recorded on the exchange?

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Definitions:

Arthropod

An invertebrate that belongs to phylum Arthropoda; characterized by a hard exoskeleton; a segmented body; and paired, jointed appendages.

Parapodia

Paired, lateral extensions found in some annelids, such as polychaete worms, used for locomotion and respiration.

Oligochaetes

A subclass of earthworms characterized by having few bristles per segment, important for soil aeration and nutrient cycling.

Proglottid

A segment of a tapeworm containing both male and female reproductive organs, capable of producing eggs.