Machinery Acquired at a Cost of $80,000 and on Which $\$ 120,000$

question 223

Essay

Machinery acquired at a cost of $80,000 and on which there is accumulated depreciation of $55,000 (including depreciation for the current year to date) is exchanged for similar machinery. Assume that the transaction has commercial substance. For financial reporting purposes, present entries to record the exchange of the machinery under each of the following assumptions: (a) Frice of new, $\$ 120,000$ ; trade-in allowance on old, $\$ 4,000$ ; balance paid in cash.
(b) Price of new, $\$ 120,000$ ; trade-in allowance on old, $\$ 34,000$ ; bal ance paid in cash.

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Definitions:

Gibbons

A group of primates known for their ability to brachiate and their distinctive whooping calls. They are smaller than great apes and live in the forests of Southeast Asia.

Spider Monkeys

A type of New World monkey known for its long limbs and tail, which it uses for brachiation through the forest canopy.

Common Ancestor

The most recent individual from which all organisms in a group directly descend.

Inhabited

Occupied by residents, referring to a place where living organisms, including humans, live and grow.