On December 2,2014,Loofa Company,which operates a furniture rental business,traded in a used delivery truck with a carrying amount of $5,400 for a new delivery truck having a list price of $16,000 and paid a cash difference of $7,500 to the dealer.The used truck had a fair value of $6,000 on the date of the exchange.The exchange has commercial substance.At what amount should the new truck be recorded on Loofa's books?
A) $10,600
B) $12,900
C) $13,500
D) $16,000

Question

Quizplus · Accepted Answer

The new truck should be recorded at the fair value of the old truck plus the cash paid. The fair value of the old truck is $6,000, and the cash paid is $7,500, totaling $13,500.

On December 2,2014,Loofa Company,which Operates a Furniture Rental Business,traded in a Used