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terra corporation purchase equipment with a 10 year useful life and zero residual value for $100,000. at the end of the fourth year, the equipment

terra corporation purchase equipment with a 10 year useful life and zero residual value for $100,000. at the end of the fourth year, the equipment is exchanged for new equipment worth $110,000. terra gets a trade-in allowance of $70,000 on the exchange, with the remaining $40,000 paid in cash. Which of the following is true of this transaction? assume the straight line depreciation method is used.

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