Non-monetary exchange question

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  • #191731
    Jasminekoko
    Participant

    Please explain why gain is recognized with cash is paid, not received? Appreciate it.

    On January 2, Elbert’s Delivery Company and Wanda’s Exporters exchanged similar delivery trucks in an exchange that lacks commercial substance. Data relative to the trucks follow:

    Elbert’s truck: Original cost $10,000, Accumulated depreciation as of January 2: $8,000, Fair market value: $3,000

    Wanda’s truck: Book value: $15,000.

    In the exchange, Elbert paid Wanda cash of $10,000. Elbert’s Delivery Company should record the new truck at:

    a. $13,000

    b. $10,000

    c. $8,000

    d. $12,000

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