Gilly Construction trades in an old tractor for a new tractor, receiving a $26,000 trade-in allowance and paying the remaining $78,000 in cash. The old tractor had cost $67,000, and straight-line accumulated depreciation of $36,250 had been recorded to date under the assumption that it would last eight years and have a $9,000 salvage value. Answer the following questions assuming the exchange has commercial substance. 1. What is the book value of the old tractor at the time of exchange? 2. What is the loss on this asset exchange? 3. What amount should be recorded (debited) in the asset account for the new tractor?

Gilly Construction trades in an old tractor for a new tractor, receiving a $26,000 trade-in allowance and paying the remaining $78,000 in cash. The old tractor had cost $67,000, and straight-line accumulated depreciation of $36,250 had been recorded to date under the assumption that it would last eight years and have a $9,000 salvage value. Answer the following questions assuming the exchange has commercial substance. 1. What is the book value of the old tractor at the time of exchange? 2. What is the loss on this asset exchange? 3. What amount should be recorded (debited) in the asset account for the new tractor?

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter11: Long-term Assets

Section: Chapter Questions

Problem 10PA: Buchanan Imports purchased McLaren Corporation for $5,000,000 cash when McLaren had net assets worth...

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