Question
On October 6, 2021, Western Farms Co. traded in an old tractor for a new one, receiving a $ 56,770 trade-in allowance and paying the
On October 6, 2021, Western Farms Co. traded in an old tractor for a new one, receiving a $ 56,770 trade-in allowance and paying the remaining $ 163,230 in cash. The old tractor cost $190,510 , and straight-line
depreciation of $ 105,510 had been recorded as of October 6, 2021. Assume the fair value of the new tractor was equal to the trade-in allowance of the old tractor plus the cash paid. Useful life : 5 year , Old tractor cost $190,510
Company's year end 2021-12-31
REQUIRED:
a. What is the carrying amount of the old tractor?
b. What amount should be debited to the new Tractor account?
c. What is the gain or loss on the exchange? (show the amount as positive regardless of whether it is a gain or loss)
d. Record the exchange.
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