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A machine that was purchased for $ 100 comma 000 has accumulated depreciation of $ 70 comma 000. The business exchanges the machine for a new one. The new machine has a market value of $ 120 comma 000​, and the business pays $ 100 comma 000 cash. Assume the exchange has commercial substance. This exchange results in a​ _

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TomShelby

Answer:

loss on disposal   10,000

Explanation:

Olda Machine 100,000

Acc Dep           (70,000)

Book Value   30,000

new Machine                120,000

cash payment               (100,000)

value of the machine 20,000

traded value 20,000 - book value 30,000 = 10,000 loss

Other way to calculate:

receive     - given up   = result

120,000   - (100,000 cash + 30,000 machine) = -10,000

Journal entry:

machine             120,000

acc depreciation 70,000

loss on disposal   10,000

              cash                          100,000

              old machine             100,000

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