Question 5

Company A exchanged used equipment for another equipment with a fair value of $23,000. The company also received cash of $3,000 in this exchange. The used equipment had a book value of $21,000 and a fair value of $25,500. Using this information, answer the following questions:

1.Does this transaction result in a loss or a gain for Company A?

2.What amount of loss/gain will the company recognize as a result of this transaction, if any?