Consolidated Technologies, Inc., a highly profitable enterprise, will be acquiring a major piece of equipment to be used in its manufacturing operations. Normally, we purchase this type of asset through a multi-year credit facility and the transaction is journalized as a Debit to Plant Assets and a Credit to Long-term Liabilities.

For this transaction, however, Consolidated will leverage an available special arrangement with the equipment manufacturer, Heavy Equipment Fabrication, Inc., which involves a more complex transaction analysis than the simple one I depict above. HEF, as the manufacturer is known throughout the industry, will permit us to structure the transaction as follows:

1. Purchase the equipment at market price.
2. Permit Consolidated to trade-in at fair value a twenty-year-old, fully depreciated piece of manufacturing equipment with a book value of $50,000 and a fair value of $75,000.
3. Cover the remainder of the purchase price (after the trade-in) with a multi-year loan. However, the loan will be payable with a fixed amount of $65,000 per annum for 5 years plus 3% of Consolidateds reported annual net income during the 5-year period that the loan is being repaid.
4. HEF will grant Consolidated a further discount equal to 50% of any profit it earns from the sale of the asset that Consolidated trades in.

Note that this is an arms-length transaction, and HEF is not related in any way to Consolidated. Senior management believe that this is a good deal for Consolidated, although the transaction is complex and unusual.

What I need you to do:

I need you to list the key accounting issues involved in this transaction and then search the FASBs codification system to identify the relevant ASC that applies to each key issue and provides the best answer to address the issue. Note that I do not need any journal entries at this time. I only need to know the applicable ASCs, cited as AAA-BB-CC-DD.

ASC AAA = BB = CC = DD =

A (Topic) B (Subtopic) C (Section) D (Paragraph)

Review and complete the table below to show the ASC reference that provides the best answer to the key accounting issues in the case. Note that the issues listed in the table may or may not be appropriate. You are to modify the issues as needed and then conduct your professional research in the ASC to find the best solution. You must use the citation format noted above to reference each ASC that you believe is appropriate. If you believe that multiple ASCs are appropriate for a particular issue, list each one in a single row as shown in the generic example in the table.

Issue description (i.e., an excerpt of the transaction as described above) 1. Purchase the equipment at market price Issue (brief summary of the issue that is searchable in the Codification system) Purchase of property plant and equipment (equipment purchase) Relevant ASC in the form AA- BB-CC-DD. e.g., ASC XXX-XX-XX-XX ASC YYY-YY-YY-YY Disposal of old asset -gain/loss 2. Permit Consolidated to trade-in at fair value a twenty-year-old, fully depreciated piece of manufacturing equipment with a book value of $50,000 and a fair value of $75,000. 3. Permit Consolidated to trade-in at fair value a twenty-year-old, fully depreciated piece of manufacturing equipment with a book value of $50,000 and a fair value of $75,000. Trade-in of PPE Long-term loans Profit sharing / variable interest payments on a loan 4. Cover the remainder of the purchase price (after the trade-in) with a multi- year loan. However, the loan will be payable with a fixed amount of $65,000 per annum for 5 years plus 3% of Consolidated's reported annual net income during the 5-year period that the loan is being repaid. 5. Cover the remainder of the purchase price (after the trade-in) with a multi- year loan. However, the loan will be payable with a fixed amount of $65,000 per annum for 5 years plus 3% of Canselidated's reported annual net income during the 5-year period that the loan is being repaid. 6. HEF will grant Consolidated a further discount equal to 50% of any profit it earns from the sale of the asset that Consolidated trades in. 7. HEF will grant Consolidated a further discount equal to 50% of any profit it earns from the sale of the asset that Consolidated trades in. Consignment sales of PPE Contingent gains and losses on PPE disposal Issue description (i.e., an excerpt of the transaction as described above) 1. Purchase the equipment at market price Issue (brief summary of the issue that is searchable in the Codification system) Purchase of property plant and equipment (equipment purchase) Relevant ASC in the form AA- BB-CC-DD. e.g., ASC XXX-XX-XX-XX ASC YYY-YY-YY-YY Disposal of old asset -gain/loss 2. Permit Consolidated to trade-in at fair value a twenty-year-old, fully depreciated piece of manufacturing equipment with a book value of $50,000 and a fair value of $75,000. 3. Permit Consolidated to trade-in at fair value a twenty-year-old, fully depreciated piece of manufacturing equipment with a book value of $50,000 and a fair value of $75,000. Trade-in of PPE Long-term loans Profit sharing / variable interest payments on a loan 4. Cover the remainder of the purchase price (after the trade-in) with a multi- year loan. However, the loan will be payable with a fixed amount of $65,000 per annum for 5 years plus 3% of Consolidated's reported annual net income during the 5-year period that the loan is being repaid. 5. Cover the remainder of the purchase price (after the trade-in) with a multi- year loan. However, the loan will be payable with a fixed amount of $65,000 per annum for 5 years plus 3% of Canselidated's reported annual net income during the 5-year period that the loan is being repaid. 6. HEF will grant Consolidated a further discount equal to 50% of any profit it earns from the sale of the asset that Consolidated trades in. 7. HEF will grant Consolidated a further discount equal to 50% of any profit it earns from the sale of the asset that Consolidated trades in. Consignment sales of PPE Contingent gains and losses on PPE disposal