On April 1 of the Current Year,a Company Traded an Old

question 54

Essay

On April 1 of the current year,a company traded an old machine that originally cost $32,000 and that had accumulated depreciation of $24,000 for a similar new machine that had a cash price of $40,000.
1.Prepare the entry to record the exchange under the assumption that a $5,000 trade-in allowance was received and the balance of $35,000 was paid in cash.Assume the exchange transaction had commercial substance.
2.Prepare the entry to record the exchange under the assumption that instead of a $5,000 trade-in allowance,a $12,500 trade-in allowance was received and the balance of $27,500 was paid in cash.Assume the exchange transaction has commercial substance.

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Definitions:

Cochlea

A spiral-shaped, fluid-filled inner ear structure that plays a key role in the process of hearing by converting sound waves into nerve impulses.

Retina

The light-sensitive layer of tissue at the back of the inner eye that converts light images into neural signals sent to the brain.

Optic Disk

Area of the retina where the optic nerve exits the retina; lacks photoreceptors and so causes a blind spot.

Optic Pit

A small depression in the optic disc where nerve fibers exit the eye, contributing to the blind spot.