Assume that a governmental entity acquires a new garbage truck. The garbage truck costs $189,000. The vendor allowed a $30,000 allowance with the trade-in of the entity's old garbage truck, which had a net book value of $42,000. The government financed the balance with a short-term bank note. The new garbage truck would be recorded in the General Capital Assets account at

Question

Quizplus · Accepted Answer

The cost of the new garbage truck is $189,000, and the trade-in allowance is $30,000. This means the government only paid $159,000 in cash for the new truck. Therefore, the General Capital Assets account should be recorded at $159,000.

Assume That a Governmental Entity Acquires a New Garbage Truck