Company B purchase a new equipment at a price of $16,200 plus trade-in, f.o.b. factory. The company paid $15,200 cash and traded in a used equipment, which had originally cost $70,400. The used equipment had a book value of $32,000 and a secondhand market value of $37,000. Freight and installation charges for the new equipment is $2,500.

At what value should the new equipment be reported on balance sheet?

• A.

  52,700

• B.

  53,700

• C.

  54,700

• D.

  55,700

Use information above, calculate the amount of gain recorded?

• A. $5,000
• B. $5,500
• C. $6,000
• D. $6,500