Sierra Landscaping, Inc. trades an old mower for a new mower, receiving a $22,000 trade-in allowance and paying the remaining $58,000 in cash. The old mower had cost $60,000, and straight-line accumulated depreciation of $35,000 had been recorded to date under the assumption that it would last 10 years and have a $8,000 salvage value. Answer the following questions assuming the exchange has commercial substance: 1. What is the book value of the old mower 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 mower?
Sierra Landscaping, Inc. trades an old mower for a new mower, receiving a $22,000 trade-in allowance and paying the remaining $58,000 in cash. The old mower had cost $60,000, and straight-line accumulated depreciation of $35,000 had been recorded to date under the assumption that it would last 10 years and have a $8,000 salvage value. Answer the following questions assuming the exchange has commercial substance: 1. What is the book value of the old mower 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 mower?
Chapter11: Property Dispositions
Section: Chapter Questions
Problem 64P
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Get correct answer the general accounting question
Transcribed Image Text:Sierra Landscaping, Inc. trades an old mower for a new mower, receiving a
$22,000 trade-in allowance and paying the remaining $58,000 in cash. The old
mower had cost $60,000, and straight-line accumulated depreciation of $35,000
had been recorded to date under the assumption that it would last 10 years and
have a $8,000 salvage value.
Answer the following questions assuming the exchange has commercial
substance:
1. What is the book value of the old mower 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
mower?
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