Selected:

The gain to be recognized from the exchange

$15.99

$15.99

The gain to be recognized from the exchange 1. On January 2, 2010, Rapid Delivery Company traded in an old delivery truck for a newer model. The exchange lacked commercial substance. Data relative to the old and new trucks follow: Old Truck Original cost $24,000 Accumulated depreciation as of January 2, 2010 16,000 Average published retail value 7,000 New Truck List price $40,000 Cash price without trade-in 36,000 Cash paid with trade-in 30,000 What should be the cost of the new truck for financial accounting purposes? a. $30,000. b. $36,000. c. $38,000. d. $40,000. 2. On December 1, 2010, Kelso Company acquired a new delivery truck in exchange for an old delivery truck that it had acquired in 2007. The old truck was purchased for $35,000 and had a book value of $13,300. On the date of the exchange, the old truck had a fair value of $14,000. In addition, Kelso paid $45,500 cash for the new truck, which had a list price of $63,000. The exchange lacked commercial substance. At what amount should Kelso record the new truck for financial accounting purposes? a. $45,500. b. $58,800. c. $59,500. d. $63,000. Use the following information for questions 3 and 4. A machine cost $120,000, has annual depreciation of $20,000, and has accumulated depreciation of $90,000 on December 31, 2010. On April 1, 2011, when the machine has a fair value of $27,500, it is exchanged for a machine with a fair value of $135,000 and the proper amount of cash is paid. The exchange lacked commercial substance. 3. The gain to be recorded on the exchange is a. $0. b. $2,500 loss. c. $5,000 gain. d. $15,000 gain. 4. The new machine should be recorded at a. $107,500. b. $122,500. c. $132,500. d. $135,000. Use the following information for questions 5 and 6. Equipment that cost $66,000 and has accumulated depreciation of $30,000 is exchanged for equipment with a fair value of $48,000 and $12,000 cash is received. The exchange lacked commercial substance. 5. The gain to be recognized from the exchange is a. $4,800 gain. b. $6,000 gain. c. $18,000 gain. d. $24,000 gain. 6. The new equipment should be recorded at a. $48,000. b. $36,000. c. $30,000. d. $28,800. Business Management Assignment Help, Business Management Homework help, Business Management Study Help, Business Management Course Help

The gain to be recognized from the exchange

Reviews

There are no reviews yet.

Be the first to review “The gain to be recognized from the exchange”

Your email address will not be published. Required fields are marked *

Close Menu
×
×

Cart