On january 2 2010 rapid delivery company traded in an

133. On January 2, 2010, Rapid Delivery Company traded in an old delivery truck for a newer
model. The exchange lacked commercial substance. Data relative to the old and new
trucks follow:
Old Truck
Original cost $24,000
Accumulated depreciation as of January 2, 2010 16,000
Average published retail value 7,000
New Truck
List price $40,000
Cash price without trade-in 36,000
Cash paid with trade-in 30,000
What should be the cost of the new truck for financial accounting purposes?
a. $30,000.
b. $36,000.
c. $38,000.
d. $40,000.
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lOMoARcPSD|5958953
134. On December 1, 2010, Kelso Company acquired a new delivery truck in exchange for an
old delivery truck that it had acquired in 2007. The old truck was purchased for $35,000
and had a book value of $13,300. On the date of the exchange, the old truck had a fair
value of $14,000. In addition, Kelso paid $45,500 cash for the new truck, which had a list
price of $63,000. The exchange lacked commercial substance. At what amount should
Kelso record the new truck for financial accounting purposes?
Use the following information for questions 135 and 136.
A machine cost $120,000, has annual depreciation of $20,000, and has accumulated
depreciation of $90,000 on December 31, 2010. On April 1, 2011, when the machine has a fair
value of $27,500, it is exchanged for a machine with a fair value of $135,000 and the proper
amount of cash is paid. The exchange has commercial substance.
135. The gain to be recorded on the exchange is
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Acquisition and Disposition of Property, Plant, and Equipment
136. The new machine should be recorded at
Use the following information for questions 137 and 138.
Equipment that cost $81,000 and has accumulated depreciation of $30,000 is exchanged for
equipment with a fair value of $48,000 and $12,000 cash is received. The exchange has
commercial substance.
137. The gain to be recognized from the exchange is
a. $9,000 gain.
b. $6,000 gain.
c. $12,000 gain.
d. $21,000 gain.
138. The new equipment should be recorded at