Ken Applegate Owned Equipment with an Original Cost of $30,000

question 1

Short Answer

Ken Applegate owned equipment with an original cost of $30,000 with $20,000 of accumulated depreciation.The equipment was traded in on new equipment costing $50,000 with a trade-in allowance of $8,000 and the balance in cash.Determine the following.
a.The book value of the old machine was ________.
b.The loss on the exchange was ________.
c.The cost basis on the books for the new machine,assuming accounting rules,is ________.

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Definitions:

Inventory

The raw materials, work-in-process products, and finished goods that are considered a part of a business's assets that are ready or will be ready for sale.

After-Tax Salvage Value

The net value of an asset after it has been disposed of and all related taxes have been paid.

Net Working Capital

The difference between a company's current assets and its current liabilities, indicating the financial health and operational efficiency.

Interest Expense

The cost incurred by an entity for borrowed funds, often expressed as an annual percentage of the principal.