Question
A Government (Internal Service Fund) trades in an old automobile for a new one. The old one had a cost of $40,000; it fair value
A Government (Internal Service Fund) trades in an old automobile for a new one. The old one had a cost of $40,000; it fair value at the time of the trade is $10,000. To date the government has changed $10,000 in depreciation. The fair value of the old car is $10,000, where as that of the new one is $38,000. Hence, the government is required to pay an additional $28,000 in cash.
A.The value of the new car is $28,000 and the loss on the asset is $10,000.
B. The value of the new car is what you received regardless of which one is more clearly evident.
C. The value of the new car is $ 38,000
D. The value of the new car is $38,000 and the loss on the old car is $20,000.
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