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    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

    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 Preview

    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 ...

    Solution Summary

    The expert examines the trade in assets for two situations at the Community Bank.