Question

Community Bank recently traded in office fixtures. Here are the facts:
Old fixtures: New fixtures:
Cost .............. $ 96,000
Cash paid ............ $ 103,000
Accumulated depreciation ....... $ 65,000
Market value .......... $ 134,000

Requirements
1. Record Community Bank’s trade-in of old fixtures for new ones. Assume the exchange had commercial substance.
2. Now let’s change one fact. 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.
Record the trade- in. Assume the exchange had commercial substance.



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  • CreatedJanuary 16, 2015
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