A company exchanges its old office equipment and $40,000 for new office equipment

Accounting Jan 25, 2021

A company exchanges its old office equipment and $40,000 for new office equipment. The old office equipment has a book value of $28,000 and a fair market value of $20,000 on the date of the exchange. The cost of the new office equipment would be recorded at

Expert Solution

Required:

Cost of new office equipment = Fair market value of old equipment + Cash paid

= $20,000 + $40,000

= $60,000.

Thus, the cost of the new office equipment =$60,000.

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