Asked by Bailey Ables on May 27, 2024
Verified
Rogaine Company exchanged inventory items that cost $47, 000 and normally sold for $65, 000 for a new delivery truck with a list price of $67, 000.The delivery truck should be recorded on Rogaine's books at
A) $47, 000
B) $65, 000
C) $67, 000
D) $82, 000
Inventory Items
Goods and materials that a business holds for the ultimate goal of resale or production.
List Price
The suggested retail price of a product or service, before any discounts or adjustments.
Delivery Truck
A vehicle specifically designed and used for transporting goods from one location to another.
- Familiarize yourself with the notion of fair value and its application in the context of asset transactions.
- Achieve competence in performing calculations and acknowledging positive or negative outcomes from trading non-cash assets.
Verified Answer
MH
Maggie HammondMay 31, 2024
Final Answer :
B
Explanation :
The delivery truck should be recorded at the fair value of the asset given up, which is the normal selling price of the inventory ($65,000), assuming the fair value is more clearly evident than the fair value of the truck received. This follows the accounting principle of recording assets at their fair value at the time of exchange.
Learning Objectives
- Familiarize yourself with the notion of fair value and its application in the context of asset transactions.
- Achieve competence in performing calculations and acknowledging positive or negative outcomes from trading non-cash assets.