SC has an old asset that originally cost $225,000 (accumulated amortization, $114,000). Its current market value is $114,001. SC purchased another asset by paying cash $13,500 and trading in the old asset. The new asset had a list price of $150,000 and a cash price of $135,000. The assets are similar. SC should record the cost of the new machine at:

Question

Quizplus · Accepted Answer

The cost of the new machine should be recorded as the cash paid plus the book value of the old asset. The book value of the old asset is $225,000 - $114,000 = $111,000. Therefore, the cost of the new machine is $13,500 (cash paid) + $111,000 (book value of old asset) = $124,500.

SC Has an Old Asset That Originally Cost $225,000 (Accumulated