Davis Company exchanged an old machine with a cost of $120,000, total accumulated depreciation of $70,000, and a fair market value of $45,000 for a similar new machine. In addition to the trade in of the old machine Davis Company also paid $20,000 cash. What amount of gain/loss should the company record for the old asset that was exchanged? O $15,000 gain O $5,000 gain O $5,000 loss O $25,000 loss O None of the above.

Davis Company exchanged an old machine with a cost of $120,000, total accumulated depreciation of $70,000, and a fair market value of $45,000 for a similar new machine. In addition to the trade in of the old machine Davis Company also paid $20,000 cash. What amount of gain/loss should the company record for the old asset that was exchanged? O $15,000 gain O $5,000 gain O $5,000 loss O $25,000 loss O None of the above.

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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Can you explain in detail why the answer is A please?
Subject : Accounting
Qw.19a.
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