Finance Problems (Other (Not Listed) Sample)

Question
Opal, Inc. owns a delivery truck that initially cost $40,000. After a depreciation of $15,000 had been deducted, the truck was traded-in on a new truck that cost $50,000. Opal was required to pay the car dealer $10,000 in cash. What is Opal's basis for the new truck?
Answer
Step 1
Assets means the resources which is owned by business. Liability means the amount which is to be paid to an outsider by business.
Assets has to be recorded at fair value when there is exchange of assets.
 
Step 2
 
Cost of newly acquired truck                                                             = $ 50,000
Book value of old truck (40000-15000)                                             = $ 25,000
Cash paid                                                                                            = $ 10,000
Profit on sale of old truck (50000-25000-10000)                               = $ 15,000
Entry should be :-
IN THE BOOKS OF OPAL , INC.
Date

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