Question
8. Clarksten Co, and Kai Inc. exchange equipment. Information related to this exchange for both companies follows: Clarkston Co. Kay inc Equipment given up: Equipment
8. Clarksten Co, and Kai Inc. exchange equipment. Information related to this exchange for both companies follows:
|
| Clarkston Co. | Kay inc |
| Equipment given up: |
|
|
| Equipment (original cost) | $45,000 | $35,000 |
| Accumulated depreciation | 25,000 | 20,000 |
| Fair value | 16,000 | 20,000 |
| Cash exchanged | (4,000) | 4,000 |
Assuming that the exchange has no commercial substance, Kay Inc. should recognize a
- Loss of $5,000
- Gain of $5,000
- Gain of $1000
- Gain of $4,000
9. Clarksten Co. and Kay Inc. exchange equipment. Information related to this exchange for both companies follows:
|
| Clarkston Co. | Kay inc |
| Equipment given up: |
|
|
| Equipment (original cost) | $45,000 | $35,000 |
| Accumulated depreciation | 25,000 | 20,000 |
| Fair value | 16,000 | 20,000 |
| Cash exchanged | (4,000) | 4,000 |
Assuming that exchange has commercial substance, Kay Inc. should record the new equipment at:
- $24,000
- $20,000
- $15,000
- $16,000
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Fraud examination
Authors: Steve Albrecht, Chad Albrecht, Conan Albrecht, Mark zimbelma
4th edition
538470844, 978-0538470841
