Corin Construction trades in an old tractor for a new tractor, receiving a $24,500 trade-in allowance and

Question:

Corin Construction trades in an old tractor for a new tractor, receiving a $24,500 trade-in allowance and paying the remaining $71,750 in cash. The old tractor had cost $83,000, and straight-line accumulated depreciation of $45,000 had been recorded to date under the assumption that it would last eight years and have an $11,000 . Answer the following questions assuming the exchange has commercial substance.
1. What is the book value of the old tractor at the time of exchange?
2. What is the loss on this asset exchange?
3. What amount should be recorded (debited) in the asset account for the new tractor?
Salvage Value
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important...