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Question - Mulungushi University freight line is a provider of transportation services to Muteteshi residents. Included in its balance is land, Buildings and coach equipment. Depreciation is calculated separately for each depreciable item. The following transaction was completed for Mulungushi University in the year 2019. Equipment with an accumulated depreciation of K80, 000 and a cost of K120, 000 was traded for similar new equipment with a cash cost of K186, 000. A trade in allowance was received by Mulungushi on the old equipment and paid the balance in cash.
Required -
i. Calculate the book value of the old asset on the date of the transaction.
ii. What is the Gain on Loss on the trade for the old asset?
iii. What is the value to be recorded as the cost for the New Equipment?
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