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At the beginning of the year four years ago, Mountain View Company purchased construction equipment for $912,600, with a useful life of eight years and
At the beginning of the year four years ago, Mountain View Company purchased construction equipment for $912,600, with a useful life of eight years and estimated salvage value of $99,000. The company uses the straight-line method of depreciation. On July 3, 20X1, this equipment was traded for new similar construction equipment that has a value of $1,000,000. The company paid $580,000 cash and was given a trade-in allowance of $420,000 for the old equipment. Assume the same facts as stated above, except that Mountain View paid cash of $512,100 on the trade-in and was given an allowance of $487,900 for the old equipment. (Note: The presentation in the text related to the exchanges of assets has been superseded by FAS
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