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

Question

Quizplus · Accepted Answer

The new equipment is recorded at its fair market value of $50,000 because the transaction has commercial substance. The trade-in allowance does not affect the recording cost of the new asset.

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