Question
Equipment that originally cost $220,000 with accumulated depreciation of $100,000 to the date of exchange is traded (exchanged) for equipment with a fair value of
Equipment that originally cost $220,000 with accumulated depreciation of $100,000 to the date of exchange is traded (exchanged) for equipment with a fair value of $160,000. To even the exchange, $40,000 cash is received. The exchange lacks commercial substance.
___ 3. | The gain to be recognized from the exchange is | |
| A) | $16,000 |
| B) | $20,000 |
| C) | $60,000 |
| D) | $80,000 |
| E) | Some other amount than those shown above. |
___ 4. | The new equipment should be recorded on the company's books at | |
| A) | $160,000. |
| B) | $120,000. |
| C) | $100,000. |
| D) | $96,000. |
| E) | Some other amount than those show above. |
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