Maxa Marina exchanged a boat with a cost of $80,000 (now 75% depreciated) for another boat with a current fair value of $27,000. No boot was paid or received. The new boat will perform the same function as the old boat, but is expected but cash flows are expected to last for 5 years longer than with the old boat. Maxa should record the new boat at

Question

Quizplus · Accepted Answer

Maxa should record the new boat at its current fair value of $27,000 since no boot was paid or received. The fact that the new boat is expected to generate cash flows for 5 years longer than the old boat does not impact the initial recording of the asset.

Maxa Marina Exchanged a Boat with a Cost of $80,000