A company's old machine,which cost $40,000 and had accumulated depreciation of $30,000,was traded in on a new machine of like purpose having an estimated 20-year life with an invoice price of $50,000.The company also paid $43,000 cash,along with its old machine to acquire the new machine.The value of new machine should be recorded at:
A)$40,000
B)$47,000
C)$50,000
D)$53,000
E)$10,000

Question

Quizplus · Accepted Answer

The company traded in their old machine with a cost of $40,000 and accumulated depreciation of $30,000, meaning the net book value of the old machine is $10,000 ($40,000 - $30,000). The company also paid $43,000 in cash to acquire the new machine with an invoice price of $50,000. Therefore, the total cost of the new machine is $93,000 ($50,000 + $43,000). The company should record the value of the new machine at its total cost of $93,000.

A Company's Old Machine,which Cost $40,000 and Had Accumulated Depreciation