Billy's Computer Shop purchased some new equipment trading in old equipment with a carrying amount of $10 000. Cash of $9000 was paid to the supplier and a trade-in allowance of $7000 was granted. The new equipment should be recorded at:
A) $19 000.
B) $16 000.
C) $9000.
D) $7000.

Question

Quizplus · Accepted Answer

The carrying amount of the old equipment is not relevant in determining the cost of the new equipment. The new equipment should be recorded at the cost of $9000 paid in cash plus the trade-in allowance of $7000, which gives a total cost of $16 000.

Billy's Computer Shop Purchased Some New Equipment Trading in Old