A company exchanges its old office equipment and $80,000 for new office equipment.The old office equipment has a book value of $56,000 and a fair value of $40,000 on the date of the exchange.The cost of the new office equipment would be recorded at

Question

Quizplus · Accepted Answer

The cost of the new office equipment is the fair value of the old office equipment plus any additional cash paid. In this case, the fair value of the old office equipment is $40,000 and the additional cash paid is $80,000, resulting in a cost of $120,000 ($40,000 + $80,000). Therefore, the correct answer is B.

A Company Exchanges Its Old Office Equipment and $80,000 for New