Harris Company has an old asset that originally cost $115,000 (accumulated amortization, $56,000). Its current market value is $105,001. Harris Company purchased another asset by paying cash $10,500 and trading in the old asset. The new asset had a list price of $135,000 and a cash price of $120,001. The assets are similar. Harris Company should record the cost of the new machine at $110,000:

Question

Quizplus · Accepted Answer

The cost of the new asset should be recorded as the sum of the cash paid ($10,500) and the fair market value of the old asset given up ($105,001), totaling $115,501.

Harris Company Has an Old Asset That Originally Cost $115,000