Reference no: EM132672640
ABC Company traded a used equipment for a newer model with Adeline, a dealer.
Old equipment:
Original cost 1,000,000
Accumulated depreciation 500,000
Trade-in value 400,000
New equipment:
List Price 1,600,000
Cash Price without trade-in 1,350,000
Cash Payment with trade-in 950,000
Required:
Problem 1. What is the initial carrying amount of the new equipment acquired by ABC Company?
Problem 2. Describe and compute for the amount to be presented as component of profit or loss as a result of the transaction in ABC's statement of comprehensive income.
Problem 3. If the fair value of the old equipment cannot be determined reliably, would your answer be the same in number 1? If "yes", why? If "no", give the correct amount.
Problem 4. Provide the entry to record the transaction in Adeline's books