The cost of the new truck is

The cost of the new truck is - $20,000 for the forklift the...

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The cost of the new truck is $101,000 ($95,000 cash + $6,000 trade-in allowance). Therefore, the  exchange is recorded by debiting vehicles for $101,000 (to record the new truck's cost), debiting  accumulated depreciation-vehicles for $80,000 (to remove the old truck's accumulated depreciation  from the books), debiting loss on exchange of vehicles for $4,000, crediting vehicles for $90,000 (to  remove the old truck from the books), and crediting cash for $95,000. If the company exchanges its used truck for a forklift, receives a $6,000 trade-in allowance, and pays 
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Unformatted text preview: $20,000 for the forklift, the loss on exchange is still $4,000. Assuming the company uses a separate account to record the cost of forklifts, the journal entry to record this dissimilar exchange debits forklifts for $26,000, debits accumulated depreciation-vehicles for $80,000, debits loss on exchange of vehicles for $4,000, credits vehicles for $90,000, and credits cash for $20,000....
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