On January 1 . 2013 . Canal Locks Corporation purchased drilling equipment for $11,500 . The equipment has an estimated useful life of four years and a salvage value of $200 . Given this information, if Canal uses the sum-of-the-years'-digits method of depreciation and then trades the equipment for new equipment with a fair market value of $16,000 on December 31 . 2014, and pays $8,000 cash in
the exchange, assuming the exchange has commercial substance, the new equipment should be recorded at
a. $16,000.
b. $12,475.
c. $11,590.
d. $8,110.
A
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