XYZ Company traded in (exchanged) an old lathe for a new one. The old lathe cost $30,000 and had accumulated depreciation of $25,000. The old machine had a fair value of $10,000, because of its excellent condition.

XYZ paid $20,000 in cash—plus the trade-in of the old machine—for the new machine. What should be the cost recorded in the accounting records for the new machine?

A. $30,000 B. $25,000 C. $35,000 D. None of the above