Question
BC, Inc. exchanged a heavy-duty dump truck for a similar truck owned by XYZ Inc. ABCs truck had a net book value of $62,500 (original
BC, Inc. exchanged a heavy-duty dump truck for a similar truck owned by XYZ Inc. ABCs truck had a net book value of $62,500 (original cost $130,000) and a fair value of $56,250. XYZs truck had a net book value of $50,000 (original cost $100,000) with a fair value of $62,500. ABC agreed to pay XYZ $6,250 as part of the exchange. The exchange had no commercial substance. What was the amount of gain or loss recognized by ABC and XYZ, respectively, in the year of the exchange?
ABC, Inc. exchanged a heavy-duty dump truck for a similar truck owned by XYZ Inc. ABCs truck had a net book value of $62,500 (original cost $130,000) and a fair value of $56,250. XYZs truck had a net book value of $50,000 (original cost $100,000) with a fair value of $62,500. ABC agreed to pay XYZ $6,250 as part of the exchange. The exchange had no commercial substance.
What was the amount of gain or loss recognized by ABC and XYZ, respectively, in the year of the exchange?
| $0; $0
| ||
| $6,250 loss; $1,250 gain
| ||
| $6,250 gain; $6,250 loss
| ||
| $6,250 loss; $12,500 gain
| ||
| $0 loss; $12,500 gain |
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Financial Statement Fraud Casebook Baking The Ledgers And Cooking The Books
Authors: Joseph T. Wells
1st Edition
0470934417, 978-0470934418
