Corbin Corporation has a plant asset with a cost of $30,000 that is traded for a similar asset priced at $60,000.Assuming accumulated depreciation of $25,000 and a trade-in allowance of $7,500,what is the cost basis for the new asset?

Question

Quizplus · Accepted Answer

The cost basis for the new asset is calculated by taking the price of the new asset ($60,000) and subtracting the trade-in allowance ($7,500), then adding the difference between the plant asset's cost ($30,000) and its accumulated depreciation ($25,000), which is $5,000. So, $60,000 - $7,500 + $5,000 = $57,500.

Corbin Corporation Has a Plant Asset with a Cost of $30,000