Problem
Al's Advertising Company trades in a red vehicle which had originally cost the Company $22,000 for a blue vehicle which has a list price of $18,600. The net book value of the red vehicle is $19,000. The car dealership allows a $17,500 trade-in but Al's Advertising Company has to pay in $1,100 to make it a fair deal. The red vehicle being traded in could be sold, if it wasn't traded in, for $17,000 on the open market as a second-hand vehicle. What value should Al's Advertising use to record the blue vehicle on their books?