A company decides to exchange its old machine and ¥1,540,000 cash for a new machine. The old machine has a book value of ¥1,260,000 and a fair value of ¥1,400,000 on the date of the exchange. The cost of the new machine would be recorded at

Question

Quizplus · Accepted Answer

The cost of the new machine would be the fair value of the old machine plus the cash paid. Therefore, the cost of the new machine would be ¥1,400,000 + ¥1,540,000 = ¥2,940,000.

A Company Decides to Exchange Its Old Machine and ¥1,540,000