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Rory City traded in a used pickup for a new pickup truck with a sticker price of $44,000
Rory City traded in a used pickup for a new pickup truck with a sticker price of $44,000. The old pickup had a fair value of $26,000, historical cost of $47,000, and accumulated depreciation of $18,000. The dealer took the old truck and $16,000 for the new truck. The new truck should be reported on the government-wide financial statements at
- $15,000
- $42,000
- $44,000
- $41,000
Expert Solution
Computation of Cost of New Truck:
Fair Value of Old Pickup = $26,000
Book Value of Old Pickup= $47,000 - $18,000 = $29,000
Cost of New Pickup = Fair Value of Old Pickup + Cash Paid
= $26,000+$16,000
Cost of New Pickup = $42,000
So, the correct option is 2nd "$42,000". The new truck should be reported on the government-wide financial statements at $42,000.
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