C is corrent. Generally, fixed assets are recorded at the cost of acquiring the asset and getting it ready for its intended use. In this case, the total cost of the new boiler is $68,000 ($60,000 purchase price + $8,000 installation costs). The information concerning the old boiler does not affect the cost of the new boiler. The only situation where information concerning the old boiler would affect the amount recorded for the new boiler would be if an exchange had taken place. The journal entries are
| Cash | 2,000 | |
| Loss on sale | 3,000 | |
| | 5,000 |
| New boiler | 68,000 | |
| | 68,000 |
A is incorrect. Generally, fixed assets are recorded at the cost of acquiring the asset and getting it ready for its intended use. In this case, the total cost of the new boiler is $68,000 ($60,000 purchase price + $8,000 installation costs). The information concerning the old boiler does not affect the cost of the new boiler. The only situation where information concerning the old boiler would affect the amount recorded for the new boiler would be if an exchange had taken place. The journal entries are
| Cash | 2,000 | |
| Loss on sale | 3,000 | |
| | 5,000 |
| New boiler | 68,000 | |
| | 68,000 |
B is incorrect. Generally, fixed assets are recorded at the cost of acquiring the asset and getting it ready for its intended use. In this case, the total cost of the new boiler is $68,000 ($60,000 purchase price + $8,000 installation costs). The information concerning the old boiler does not affect the cost of the new boiler. The only situation where information concerning the old boiler would affect the amount recorded for the new boiler would be if an exchange had taken place. The journal entries are
| Cash | 2,000 | |
| Loss on sale | 3,000 | |
| | 5,000 |
| New boiler | 68,000 | |
| | 68,000 |
D is incorrect. Generally, fixed assets are recorded at the cost of acquiring the asset and getting it ready for its intended use. In this case, the total cost of the new boiler is $68,000 ($60,000 purchase price + $8,000 installation costs). The information concerning the old boiler does not affect the cost of the new boiler. The only situation where information concerning the old boiler would affect the amount recorded for the new boiler would be if an exchange had taken place. The journal entries are
| Cash | 2,000 | |
| Loss on sale | 3,000 | |
| | 5,000 |
| New boiler | 68,000 | |
| | 68,000 |
