Calculate the gain and loss on the transaction

Assignment Help Accounting Basics
Reference no: EM132989470

Question - The Bramos Printing Company was founded in 2000 by Mr. Timken as a one-man-job printing firm in a small southwestern town. Shortly after its founding, the owner decided to concentrate on one specialty line of printing. Because of a high degree of technical proficiency, the company experienced a rapid growth. However, the company suffered from a competitive disadvantage in that the major market for this specialized output was in a metropolitan area over 300 miles away from the company's plant. For this reason, the owner, in 2012, decided to move nearer his primary market. He also decided to expand and modernize his facilities at the time of the move. After some investigation, an attractive site was found in a suburb of his primary market, and the move was made.

1) A new strip caster with an invoice cost of $45,000 was purchased. The company paid $30,000 cash and received a trade-in allowance of $15,000 on a used strip caster. The used strip caster could have been sold outright for not more than $12,000. It had cost $30,000 new, and accumulated depreciation on it was $12,000. The design and technology of the new strip caster was dissimilar to that of the used strip caster traded in for the new strip caster.

1) New Strip Caster - Fully analyze this transaction. As we have done multiple times in class, calculate the gain/loss on the transaction.

i) How will this gain/loss be treated?

ii) What code section(s) will affect this transaction?

iii) How/where will it be reported?

Calculate the cost that would go on the books for this purchase.

 

Reference no: EM132989470

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