Exchange Intelligent Corporation recently acquired new semiconductor assembly eq
ID: 2466063 • Letter: E
Question
Exchange Intelligent Corporation recently acquired new semiconductor assembly equipment to be used in its production process. Intelligent Corporation traded in old semiconductor equipment that had an original cost of $300,000 and accumulated depreciation on the date of the exchange of $225,000. The fair value of the old equipment is $85,000. In addition, Intelligent Corporation signed a promissory note to pay $200,000 in three years plus interest at a market interest rate of 6%. What is the cost recorded for the new equipment? ____________________________________ What is the gain/(loss) on disposal of the old equipment?
Explanation / Answer
Cost of New Equipment to be recorded
= Fair value of equipment exchanged + Amount accepted to pay in future
=$85,000+$200,000
=$285,000
Book Value of Asset= Original Cost of Asset – Accumulated Depreciation
=$300,000-$225,000
=$75,000
Gain= Fair Value- Book Value
=$85,000-$75,000
=$10,000
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.