Question

On November 3, 2014, Yellow Media exchanged an old computer for a new computer that had a list price of $190,000. The original cost of the old computer was $150,000 and related accumulated depreciation was $65,000 up to the date of the exchange. Yellow Media received a trade-in allowance of $100,000 and paid the balance in cash.

Required
a. Record the exchange assuming the fair values are unknown.
b. Assume that the fair value of the new asset was $174,000. Record the exchange.

Analysis Component: What is the dollar value that will be used to depreciate the new computer in part (b)? Explain which GAAP helped you answer the question correctly.



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  • CreatedJanuary 08, 2015
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