Trade in asset for two situations
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Community Bank recently traded in office fixtures. Here are the facts:
Old fixtures
Cost 96,000
Accumulated depreciation 65,000
New Fixtures
a. Cash paid, 103,000 plus the old fixtures
Requirements
1. Record Community Bank's trade-in of old fixtures for new ones.
2. Now let's change one fact and see a different outcome. Community Bank feels compelled to do business with Mountain Furniture, a bank customer, even though the bank can get the fixtures elsewhere at a better price. Community Bank is aware that the new fixtures' market value is only $127,000. Now record the trade-in.
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Solution Summary
The expert examines the trade in assets for two situations at the Community Bank.
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Answer 1
Net Book Value of Old Fixtures = 96,000 - 65,000 = $31,000
Since, no information is provided about the fair value, we will take net book value as fair ...
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