Community Bank recently traded in office fixtures. Here are the facts:
Accumulated depreciation 65,000
a. Cash paid, 103,000 plus the old fixtures
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.
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 ...
The expert examines the trade in assets for two situations at the Community Bank.