Ken Applegate owned equipment with an original cost of $45,000 with $38,000 of accumulated depreciation. The equipment was traded in on new equipment costing $55,000 with a trade-in allowance of $6,000 and the balance in cash. Determine the following

a. The book value of the old machine was ________.
b. The loss on the exchange was ________.
c. The cost basis on the books for the new machine, assuming accounting rules, is ________.
Fill in the blank with the appropriate word.

Answer:
a. $7,000
b. $1,000
c. $55,000