A Fixed Asset with a Cost of $41,000 and Accumulated

question 165

Multiple Choice

A fixed asset with a cost of $41,000 and accumulated depreciation of $36,000 is traded for a similar asset priced at $50,000 (fair market value) in a transaction with commercial substance. Assuming a trade-in allowance of $4,000, at what cost will the new equipment be recorded in the books?

• A) $54,000
• B) $45,000
• C) $51,000
• D) $50,000

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Definitions:

Predict

The act of stating or estimating that a specified event will happen in the future based on existing data or patterns.

Affective Forecasting

The process of predicting one's emotional state in future circumstances.

Anxiety

This is a feeling of worry, nervousness, or unease, typically about an imminent event or something with an uncertain outcome.

Risk-as-feelings Hypothesis

A theory suggesting that people's decision-making is influenced by their emotional responses to the possibility of negative outcomes.