In January 2011, Butz Company Exchanged an Old Machine, with a Book

question 45

Multiple Choice

In January 2011, Butz Company exchanged an old machine, with a book value of $156,000 and a fair value of $140,000, and paid $40,000 cash for a similar used machine having a list price of $200,000. The exchange had commercial substance. At what amount should the machine acquired in the exchange be recorded on Butz's books?

• A) $200,000
• B) $196,000
• C) $184,000
• D) $180,000

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Definitions:

Base Pay

The initial rate of compensation an employee receives, excluding any additional benefits, bonuses, or overtime.

Annual Merit Raise

An increase in salary given yearly based on an employee's performance evaluation.

Performance Appraisal

The systematic evaluation of an employee's performance on the job, typically including both qualitative and quantitative assessments.

Base Pay

The initial salary or wage given to an employee excluding any extra benefits, bonuses, or raises, which serves as the foundation for total compensation.