A machine costing P120,000, with accumulated depreciation of P95,000, with a fair market value of P27,500, was exchanged for a new machine with a fair value of P135,000 and the proper amount of cash is paid. The exchange has commercial substance. The new machine is to be recorded at what amount?

A machine costing P120,000, with accumulated depreciation of P95,000, with a fair market value of P27,500, was exchanged for a new machine with a fair value of P135,000 and the proper amount of cash is paid. The exchange has commercial substance. The new machine is to be recorded at what amount?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

A machine costing P120,000, with
accumulated depreciation of P95,000, with
a fair market value of P27,500, was
exchanged for a new machine with a fair
value of P135,000 and the proper amount of
cash is paid. The exchange has commercial
substance. The new machine is to be
recorded at what amount?

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