A Company Exchanged an Old Automobile for a Newer Model

question 240

Essay

A company exchanged an old automobile for a newer model.The old automobile account had a cost of $36,000 and accumulated depreciation of $25,000 as of the exchange date.The new automobile had a cash price of $34,000,but the company was given a $15,000 trade-in allowance and the balance of $19,000 was paid in cash.Prepare the journal entry to record the exchange,if the transaction has commercial substance.

---

Definitions:

Debris Flows

Rapid downhill movement of water-saturated soil, rocks, and vegetation, often triggered by heavy rainfall or rapid melting of snow.

Composite Volcanoes

Volcanoes characterized by explosive eruptions and composed of layers of volcanic ash, lava, and rocks.

Subduction

The process where one tectonic plate moves under another and sinks into the Earth's mantle, often associated with volcanic activity and earthquakes.

Oceanic Plate

A section of the Earth's lithosphere that exists beneath the oceans, thinner than continental plates but denser, formed at mid-ocean ridges.