Question

The Bacon Company acquired new machinery with a price of $13,498 by trading in similar old machinery and paying $12,148. The old machinery originally cost $9,399 and had accumulated depreciation of $7,519. In recording this transaction, Bacon Company should record a loss of $530 a gain of $530 the new machinery at $11,618 the new machinery at $12,148

Answer 1

Correct answer----a loss of $530

Calculations

A	Cost of old machine	$    9,399.00
B	Less: Accumulated depreciation	$    7,519.00
C=A-B	Book value of old Machine	$    1,880.00
D	Value of new machine	$ 13,498.00
E	Less: Cash paid	$ 12,148.00
F=D-E	Consideration in form of old machine	$    1,350.00
G=C-F	Loss on exchange	$        530.00