On January 2, 2017, Congo Delivery Company traded in an old delivery truck for a newer model.Data relative to the old and new trucks follow: The cost of the new truck for financial accounting purposes is

Question

On January 2, 2017, Congo Delivery Company traded in an old delivery truck for a newer model.Data relative to the old and new trucks follow:  The cost of the new truck for financial accounting purposes is

Quizplus · Accepted Answer

The cost of the new delivery truck for financial accounting purposes is the fair value of the asset given up plus any cash paid. In this case, the fair value of the old truck is $12,000 and Congo Delivery Company also paid $15,000 cash, making the total cost of the new truck $27,000 (fair value of old truck + cash paid). Therefore, the correct answer is choice C.

On January 2, 2017, Congo Delivery Company Traded in an Old