On December 1, 2010, Lear Company acquired a new delivery truck in exchange for an old delivery truck that it had acquired in 2007.The old truck was purchased for $20,000 and had a book value of $7,600.On the date of the exchange, the old truck had a market value of $8,000.In addition, Lear paid $26,000 cash for the new truck, which had a list price of $36,000.At what amount should Lear record the new truck for financial accounting purposes?

Question

Quizplus · Accepted Answer

The cost of the new truck for accounting purposes is the sum of the fair market value of the old truck and any cash paid. The fair market value of the old truck is $8,000, and Lear paid $26,000 cash for the new truck, so the cost of the new truck is $8,000 + $26,000 = $34,000.

On December 1, 2010, Lear Company Acquired a New Delivery