Rachel's Gymnasium purchased some new gym equipment trading in old equipment with a carrying amount of $5 000.Cash of $9 000 was paid to the supplier and a trade-in allowance of $3 000 was granted.The new equipment should be recorded at:

Question

Quizplus · Accepted Answer

The cost of the new equipment is $9,000 (cash paid) plus $3,000 (trade-in allowance), minus the carrying amount of the old equipment of $5,000, which equals $7,000. Therefore, the new equipment should be recorded at $12,000 ($7,000 cost + $5,000 carrying amount of old equipment). So, the best choice is option B ($12,000).

Rachel's Gymnasium Purchased Some New Gym Equipment Trading in Old