EC Exchanged an Old Widget-Making Machine (Model A) That Originally

question 169

Multiple Choice

EC exchanged an old widget-making machine (Model A) that originally cost $46,000 (accumulated amortization, $37,400) plus $10,000 cash for an improved widget-making machine (model B) owned by IC. IC originally acquired the Model B machine for $77,000 (accumulated amortization to date, $42,000) . EC's machine has a current market value of $5,000 and IC's has a current market value of $20,000. These are similar assets. EC should record the cost of the Model B widget-making machine acquired at:

• A) $15,000.
• B) $17,600.
• C) $18,600.
• D) $20,000.

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Definitions:

Concurrent Property Ownership

Refers to a situation where two or more parties hold ownership rights in a single piece of property simultaneously.

Cooperative

An organization owned and operated by a group of individuals for their mutual benefit.

Fee Simple Absolute

The most complete form of property ownership, giving the owner total control and rights to the property.

Condominium

A condominium is a type of property ownership where individual units in a larger complex are owned independently while common areas are held jointly by the unit owners.