On March 5, 2010, Yamada Dairy Co. decided to replace its outdated pasteurization system with a more efficient one. The old system had a book value of $10,500 and a fair value of $1,500. Yamada's new pasteurization system has a fair value of $210,000, for which Yamada paid $208,500 after allowing the contractor to keep the old equipment. How much should Yamada capitalize on the cost of the new pasteurization system?

On March 5, 2010, Yamada Dairy Co. decided to replace its outdated pasteurization system with a more efficient one. The old system had a book value of $10,500 and a fair value of $1,500. Yamada's new pasteurization system has a fair value of $210,000, for which Yamada paid $208,500 after allowing the contractor to keep the old equipment. How much should Yamada capitalize on the cost of the new pasteurization system?

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter10: Property, Plant And Equipment: Acquisition And Subsequent Investments

Section: Chapter Questions

Problem 10MC

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On March 5, 2010, Yamada Dairy Co. decided to replace its outdated pasteurization system with a more efficient one. The old system had a book value of $10,500 and a fair value of $1,500. Yamada's new pasteurization system has a fair value of $210,000, for which Yamada paid $208,500 after allowing the contractor to keep the old equipment. How much should Yamada capitalize on the cost of the new pasteurization system? Provide answer
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