On November 3, 2014, Yellow Media exchanged an old computer for a new computer that had a

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.

GAAP
Generally Accepted Accounting Principles (GAAP) is the accounting standard adopted by the U.S. Securities and Exchange Commission (SEC). While the SEC previously stated that it intends to move from U.S. GAAP to the International Financial Reporting Standards (IFRS), the...