A company exchanges its old office equipment and $40,000 for new office equipment.The old office equipment has a book value of $28,000 and a fair value of $20,000 on the date of the exchange.The cost of the new office equipment would be recorded at

Question

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The cost of the new office equipment would be equal to the fair value of the old office equipment plus the cash paid, which is $20,000 + $40,000 = $60,000. Therefore, the cost of the new office equipment would be recorded at $60,000.

A Company Exchanges Its Old Office Equipment and $40,000 for New