Homework Answers
D. A gain on $40
Calculation of the value of the old printer
Value of old printer = Cost - Depreciation for 2 years
Value of old printer = $600 - ($120 *2)
Value of old printer = $360
Since, the actual value of the old printer is $360 and the trade-in-allowance is $400 which is more than the value, hence, there is a gain on exchange.
Gain on exchange = Trade-in-allowance - Old value of the printer.
Gain on exchange = $400 - $360
Gain on exchange = $40
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