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Equipment with a fair value of $600,000 and book value of $360,000 (cost $660,000 and accumulated...

Equipment with a fair value of $600,000 and book value of $360,000 (cost $660,000 and accumulated depreciation $300,000) is exchanged for equipment with a fair value of $480,000 and $120,000 cash is received. The exchange lacked commercial substance.

The gain to be recognized from the exchange is

Group of answer choices

$240,000

$180,000

$48,000

$60,000

None of the other answers are correct

Business   Accounting   
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Homework Answers

Answer #1

The correct answer is $ 240,000

Debit Credit
New Asset                          4,80,000
Cash                          1,20,000
Accumulated Depreciation                          3,00,000
Gain on Exchange (Bal. Figure)        2,40,000
Old Assets        6,60,000
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