Exercise 10B-16 Z Your answer is partially correct. Try again Tamarisk 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 $110,000 cash. The following information was gathered Initial Cost on Depreciation to Book Value on Description Seller's Books Date on Seller's Books Seller's Books Appraised Value $55,000 $55,000 $99,000 Machinery $110,000 33,000 66,000 55,000 Equipment 11,000 Asset 3: This machine was acquired by making a $11,000 down payment and issuing a $33,000, 2-year, zero-interest-bearing note. The note is to be paid off in two $16,500 installments made at the end of the first and second years. It was estimated that the asset could have been purchased outright for $39,490. Asset 4: This machinery was acquired by trading in used machinery. (The exchange lacks commercial substance.) Facts concerning the trade-in are as follows. Cost of machinery traded $110,000 44,000 Accumulated depreciation to date of sale Fair value of machinery traded 88,000 Cash received 11,000 Fair value of machinery acquired 77,000