A Company Exchanged Its Used Machine for a New Machine

question 62

Essay

A company exchanged its used machine for a new machine in a transaction that had commercial substance.The old machine cost $68,000,and the new one had a cash price of $95,000.The company had taken $59,000 depreciation on the old machine and was allowed a $2,500 trade-in allowance and the balance of $92,500 was paid in cash.What gain or loss should be recorded on the exchange?

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Definitions:

Quantity Demanded

The total amount of a good or service that consumers are willing to purchase at a given price over a specific period of time.

Quantity Supplied

The total amount of a product that producers are willing and able to sell at a given price over a specified period.

Equilibrium Price

The price at which the quantity of a good or service offered by suppliers equals the quantity demanded by consumers.

Shortage

A market condition where the demand for a product exceeds its supply at a particular price, often leading to price increases.