Ramond Construction trades in an old tractor for a new tractor,
receiving a $31,850 trade-in allowance and paying the remaining $93,275
in cash. The old tractor had cost $107,900, and straight-line
accumulated depreciation of $58,500 had been recorded to date under the
assumption that it would last eight years and have a $14,300 salvage
value. Answer the following questions assuming the exchange has
commercial substance.
Required:
1. What is the book value of the old tractor at the time of exchange?
2. What is the loss on this asset exchange?
3. What amount should be recorded (debited) in the asset account for the new tractor?
