Assume that a business trades in an old cash register for a new one.Under the income tax method,

Question

Quizplus · Accepted Answer

Under the income tax method, when a business trades in an old asset for a new one, the cost of the new asset is recorded as the book value of the old asset plus the cash amount paid or to be paid. This is because the original cost of the old asset is already reflected in the company's books and cannot be recorded again. Therefore, the cost of the new asset is recorded as the remaining value of the old asset plus any additional cash paid. This results in a new asset with a cost equal to the book value of the old asset plus any additional costs incurred.

Assume That a Business Trades in an Old Cash Register