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Loonyback Inc. exchanged an old vehicle for a new vehicle on August 31, 2021. The...

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Accounting

Loonyback Inc. exchanged an old vehicle for a new vehicle on August 31, 2021. The original cost of the vehicle was $45,000 on January 1, 2017. Depreciation was calculated using the straight-line method over a ten-year useful life, with an estimated residual value of $3,000. The fair value of the old vehicle on August 31, 2021 was $21,500. The list price of the new vehicle was $30,000. Loonyback received a $24,000 trade in allowance from the dealership and paid $6,000 cash for the new vehicle. The new machinery should be recorded on Loonyback's books at

$30,000.

$24,000.

$27,500.

$23,500.

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