1. Tainan company decides to exchange its old machine and $2,600,000 cash for a new machine. The old machine has a book value of $1,400,000 and a fair value of $2,400,000 on the date of the exchange. If this transaction has commercial substance, the cost of the new machine would be recorded at a.$4,000,000. b.$2,600,000. c.$5,000,000. d.cannot be determined.
1. Tainan company decides to exchange its old machine and $2,600,000 cash for a new machine. The old machine has a book value of $1,400,000 and a fair value of $2,400,000 on the date of the exchange. If this transaction has commercial substance, the cost of the new machine would be recorded at a.$4,000,000. b.$2,600,000. c.$5,000,000. d.cannot be determined.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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1. Tainan company decides to exchange its old machine and $2,600,000 cash for a new machine. The old machine has a book value of $1,400,000 and a fair value of $2,400,000 on the date of the exchange. If this transaction has commercial substance, the cost of the new machine would be recorded at
a.$4,000,000.
b.$2,600,000.
c.$5,000,000.
d.cannot be determined.
2. Belpre Inc. constructed a new office building. Building material costs for the new building were $3,000,000; total labor costs were $2,500,000; total company overhead was $9,000,000 (25% of which could be assigned to the new project); and interest paid on a new construction loan for the project was $1,250,000.
Calculate the total cost of the self-constructed building.
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