A company plans to purchase a new machine costing $40 000. It will part exchange one of
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A company plans to purchase a new machine costing $40 000. It will part exchange one of its existing machines for the new one. The existing machine has a net book value of $4000 and the part exchange will result in a loss on disposal of the machine of $1000. The company will pay the balance due on the new machine by cheque.
How will the transaction be recorded in the cash budget?
A. Payment for new machine $37 000
B. Payment for new machine $40 000
C. Payment for new machine $40 000; cash received for old machine $3000
D. Payment for new machine $40 000; cash received for old machine $4000
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