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Information Processing, Inc. (IPI) exchanges its used machine for a new machine with Jerrod Business Solutions Inc. The exchange has commercial substance. IPI’s used machine has a book value of $8,000 (original cost $12,000 less $4,000 accumulated depreciation) and a fair value of $6,000. The new machine has a fair value of $16,000. IPI also pays Jerrod Business Solutions $7,000  cash in the transaction. Accounting Issue(s):  What is the correct amount that IPI should record for the machine it acquired in the exchange with Jerrod Business Solutions?  Question  1:  What is the correct amount that IPI should record for the machine it acquired in the exchange with Jerrod Business Solutions?   $6,000  $7,000  $8,000 $13,000 $15,000 $16,000

Information Processing, Inc. (IPI) exchanges its used machine for a new machine with Jerrod Business Solutions Inc. The exchange has commercial substance. IPI’s used machine has a book value of $8,000 (original cost $12,000 less $4,000 accumulated depreciation) and a fair value of $6,000. The new machine has a fair value of $16,000. IPI also pays Jerrod Business Solutions $7,000  cash in the transaction. Accounting Issue(s):  What is the correct amount that IPI should record for the machine it acquired in the exchange with Jerrod Business Solutions?  Question  1:  What is the correct amount that IPI should record for the machine it acquired in the exchange with Jerrod Business Solutions?   $6,000  $7,000  $8,000 $13,000 $15,000 $16,000

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Information Processing, Inc. (IPI) exchanges its used machine for a new machine with Jerrod Business Solutions Inc. The exchange has commercial substance. IPI’s used machine has a book value of $8,000 (original cost $12,000 less $4,000 accumulated depreciation) and a fair value of $6,000. The new machine has a fair value of $16,000. IPI also pays Jerrod Business Solutions $7,000  cash in the transaction.

Accounting Issue(s):  What is the correct amount that IPI should record for the machine it acquired in the exchange with Jerrod Business Solutions? 

Question  1:  What is the correct amount that IPI should record for the machine it acquired in the exchange with Jerrod Business Solutions? 

  1.  $6,000
  2.  $7,000
  3.  $8,000
  4. $13,000
  5. $15,000
  6. $16,000
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