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Assigning Value to Assets in Nonmonetary Exchange Lacking Commercial Substance Mariot trades in its old equipment (with the following carrying values) for new equipment. Mariot received $2,000 cash on the exchange. The fair value of the new equipment is $7,000. If the transaction lacks commercial substance, what amount does Mariot assign to the new equipment? Note: Carry all decimals in calculations; round the final answer to the nearest dollar: Ampount assiened to new equipment Exchanges of Nonmonetary Assets There is significant disagreement about how to account for exchanges of nonmonetary assets. The accounting treatment varies based on (1) whether the transaction generates a gain or a loss, (2) whether the exchange has commercial substance, meaning that the company's future cash flows change because of the transaction (i.e. the company's position has changed because of the transaction), and (3) whether cash is received. The transaction does not have commercial substance Use the following formula to calculate the recognized gain: [Cash Received / (Cash + Implied FMV of new FA)] = \% If this % is less than 25%, take % total gain = recognized gain If this % is greater than 25%, record the full gain