Use the Following Information for Questions

question 126

Multiple Choice

Use the following information for questions.
Equipment that cost $81,000 and has accumulated depreciation of $30,000 is exchanged for equipment with a fair value of $48,000 and $12,000 cash is received.The exchange has commercial substance.
-The new equipment should be recorded at

• A)$28,800.
• B)$51,000.
• C)$30,000.
• D)$48,000.

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Definitions:

Par Value

A nominal value assigned to a security by the issuer, often used in the context of bonds or stock.

Yielding

The income return on an investment, such as the interest or dividends received from holding a particular security.

FASB 13

Accounting standard issued by the Financial Accounting Standards Board related to lease accounting.

Operating Lease

A lease in which the lessee does not effectively acquire ownership of the leased asset. Accounted for as a stream of expense payments on the income statement. No entry is made on the balance sheet to reflect the acquisition of the asset. The most common form of off balance sheet financing. Compare with Financing lease.