Blossom Industries purchased the following assets and constructed a building as well. All this was done during the current year. Assets 1 and 2: These assets were purchased as a lump sum for $330,000 cash. The following information was gathered. Description Machinery Equipment Initial Cost on Seller's Books $330,000 198,000 Cash received Depreciation to Date on Seller's Books $165,000 Cost of machinery traded Accumulated depreciation to date of sale Fair value of machinery traded 33,000 $330,000 132,000 Book Value on Seller's Books Asset 3: This machine was acquired by making a $33,000 down payment and issuing a $99,000, 2-year, zero-interest-bearing note. The note is to be paid off in two $49,500 installments made at the end of the first and second years. It was estimated that the asset could have been purchased outright for $118,470. 264,000 $165,000 Asset 4: This machinery was acquired by trading in used machinery. (The exchange lacks commercial substance.) Facts concerning the trade-in are as follows. 33,000 165,000 Appraised Value $297,000 99,000 1

Blossom Industries purchased the following assets and constructed a building as well. All this was done during the current year. Assets 1 and 2: These assets were purchased as a lump sum for $330,000 cash. The following information was gathered. Asset 3: This machine was acquired by making a $33,000 down payment and issuing a $99,000,2-year, zero-interest-bearing note. The note is to be paid off in two $49,500 instaliments made at the end of the first and second years. It was estimated that the asset could have been purchased outright for $118.470 Asset 4: This machinery was acquired by trading in used machinery. (The exchange lacks commeccial substance.) Facts concerning the trade-in are as follows