Eagle Works traded a plant asset with a cost of $30,000 and accumulated depreciation of $25,000 for a similar asset priced at $60,000.Assuming a trade-in of $2,500,the cost basis of the new asset under income tax rules is:

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Under income tax rules, when a company trades in an asset, the cost basis of the new asset is calculated by taking the cost of the new asset and adding any trade-in allowance or cash paid. In this case, Eagle Works traded in an asset and received a $2,500 trade-in allowance. Therefore, the cost basis of the new asset is the price of the new asset ($60,000) plus the trade-in allowance ($2,500), totaling $62,500.

Eagle Works Traded a Plant Asset with a Cost of $30,000