The Bacon Company Acquired New Machinery with a Price of $15,200

question 107

Multiple Choice

The Bacon Company acquired new machinery with a price of $15,200 by trading in similar old machinery and paying $12,700.The old machinery originally cost $9,000 and had accumulated depreciation of $5,000.In recording this transaction,Bacon Company should record

• A)a loss of $1,500
• B)the new machinery at $16,700
• C)a gain of $1,500
• D)the new machinery at $12,700

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Definitions:

Market Price

The current price at which an asset or service can be bought or sold in the open market.

Gross Margin

The difference between revenue and cost of goods sold, divided by revenue, expressed as a percentage, indicating the financial health of a company's core activities.

Total Assets

The sum of all current and noncurrent assets that a company owns, as reported on the balance sheet.

Stockholders' Equity

The ownership stake of shareholders in a company, calculated as the value of the company's assets minus its debts.