A company acquires $45,000 in new web servers. In exchange, the company trades in old web servers along with a cash payment. The old servers originally cost $30,000 and had accumulated depreciation of $23,400 at the time of the trade. Prepare entries to record the trade under two different assumptions where (a) the exchange has commercial substance and the old servers have a trade-in allowance of $3,000 and (b) the exchange has commercial substance and the old servers have a trade-in allowance of $7,000.
A company acquires $45,000 in new web servers. In exchange, the company trades in old web servers along with a cash payment. The old servers originally cost $30,000 and had accumulated depreciation of $23,400 at the time of the trade. Prepare entries to record the trade under two different assumptions where (a) the exchange has commercial substance and the old servers have a trade-in allowance of $3,000 and (b) the exchange has commercial substance and the old servers have a trade-in allowance of $7,000.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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A company acquires $45,000 in new web servers. In exchange, the company trades in old web servers
along with a cash payment. The old servers originally cost $30,000 and had
$23,400 at the time of the trade. Prepare entries to record the trade under two different assumptions where
(a) the exchange has commercial substance and the old servers have a trade-in allowance of $3,000 and
(b) the exchange has commercial substance and the old servers have a trade-in allowance of $7,000.
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