Community Bank recently traded in office fixtures. Here are the facts:
Old fixtures:
• Cost, $96,000.
• Accumulated depreciation, $65,000.
New fixtures:
• Cash paid, $103,000, plus the old fixtures.
Requirements
1. Record Community Bank’s trade-in of old fixtures for new ones.
2. Now let’s change one fact and see a different outcome. Community Bank feels compelled to do business with Mountain Furniture, a bank customer, even though the bank can get the fixtures elsewhere at a better price. Community Bank is aware that the new fixtures’ market value is only $127,000. Now record the trade-in.