on june 1, 2012, the company buys a new machine of greater capacity for $35,000, delivering, trading, in the old machine which has a fair value and trade-in allowance of $20,000. to prepare the old machine for removal from the plant cost $75, and expenditures to install the new one were $1,500. it is estimated that the new machine has a useful life of 10 years, with residual value of $4,000 at the end of the time. the exchange has commercial substance.
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