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

question 4

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.For financial reporting purposes,present entries to record the disposition of the old machinery and the acquisition of new machinery under each of the following assumptions:

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Definitions:

Creditor

A person to whom a debt or legal obligation is owed and who has the right to enforce payment of that debt or obligation.

Consideration

Something of value (such as money, goods, or services) that is exchanged between parties in a contract, making the agreement legally binding.

Output Contract

An agreement in which a seller agrees to sell all the production to a particular buyer, who agrees to purchase it.

Requirements Contract

A contract in which one party agrees to supply as much of a good or service as the other party needs during a specified period.