Corin Construction trades in an old tractor for a new tractor, receiving a $24,500 trade-in allowance and
paying the remaining $71,750 in cash. The old tractor had cost $83,000, and straight-line accumulated
depreciation of $45,000 had been recorded to date under the assumption that it would last eight years
and have an $11,000 salvage value. Answer the following questions assuming the exchange has commercial
substance.
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?
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