Question: 1. A company trades an old Web server for a new one. The cost of the old server is $30,000, and its accumulated depreciation at the time of the trade is $23,400. The new server has a cash price of $45,000. Prepare entries to record the trade under two different assumptions where the company receives a trade-in allowance of
(a) $3,000 and the exchange has commercial substance, and
(b) $7,000 and the exchange lacks commercial substance.
2. What is the general rule for cost inclusion for plant assets?