Machinery acquired at a cost of $80,000 and on which there is accumulated deprec

Question

Machinery acquired at a cost of $80,000 and on which there is accumulated depreciation of $50,000 (including depreciation for the current year to date) is exchanged for similar machinery. For financial reporting purposes, present entries to record the disposition of the old machinery and the acquisition of new machinery under each of the following assumptions:
(a) Price of new, $115,000; trade-in allowance on old, $4,000; balance paid in cash.
(b) Price of new, $115,000; trade-in allowance on old, $34,000; balance paid in cash.

Explanation / Answer

80,000 -50,000 = 30,000 cost of old machine a)New Machine 115,000 Allowance Trade-in 4000 Old Machihe 30000 Cash 81000 b) New Machine 115,000 Allowance Trade-in 34000 Old Machine 30000 Cash 51000

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