Richmond, Inc.exchanged a piece of equipment with an original cost of $82, 000, accumulated depreciation to date of $40, 000, and a fair value of $46, 000 for a similar piece of equipment.The newly acquired equipment had a book value of $40, 000 and a fair market value of $46, 000.Richmond should record the equipment acquired at

Question

Quizplus · Accepted Answer

When an exchange of similar assets occurs, the value of the new asset received should be recorded at the book value of the old asset given up plus any additional cash or other consideration given or received. In this case, Richmond gave up equipment with a book value of $42,000 ($82,000 - $40,000 in accumulated depreciation) and received equipment with a fair market value of $46,000. Therefore, Richmond would record the newly acquired equipment at $42,000.