Family Farms exchanged an old tractor for a newer model. The new tractor is similar in nature
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Question:
Family Farms exchanged an old tractor for a newer model. The new tractor is similar in nature to the old one and therefore there is no economic substance to the transaction.
| Amounts | |
| Cost of old tractor | $28,000 |
| Accumulated depreciation on old tractor | $17,000 |
| Cash received | $1,500 |
| Fair value of new tractor | $13,500 |
What is the value assigned to the new tractor?
Expert Answer:
In this scenario since the exchange of the old tractor for the newer model has no economic subs... View the full answer
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