A Company Exchanged Its Used Machine for a New Machine

question 42

Essay

A company exchanged its used machine for a new machine in a transaction that had commercial substance. The old machine cost $70,000, and the new one had a cash price of $95,000. The company had taken $60,000 depreciation on the old machine and was allowed a $2,500 trade-in allowance and the balance of $92,500 was paid in cash. What gain or loss should be recorded on the exchange?

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Definitions:

Obsessive-Compulsive Disorder

A mental health disorder characterized by recurrent, unwanted thoughts (obsessions) and/or repetitive behaviors (compulsions).

Thalamus

A brain structure that relays sensory messages to the cerebral cortex.

Amygdala

A brain structure involved in the arousal and regulation of emotion and the initial emotional response to sensory information.

Prefrontal Cortex

A part of the frontal lobes of the brain, involved in decision making, problem-solving, control of purposeful behaviors, consciousness, and emotions.