Please do it by type not pics.
1.Wille Co. trades a used truck for a used car. The trade has been decided to lack commercial substance. The used truck had an original cost of $15,000 and accumulated depreciation of $7,500. The used truck has a fair value of $11,000. The car has a fair value of $9,000. In addition to the car, you receive $2,000. Calculate the amount of gain that will be recognized.
The used truck had an original cost of $15,000 and accumulated depreciation of $7,500.
Hence, book value of truck= Original cost - Accumulated depreciation
= 15,000 - 7,500
= 7,500
In exchange of truck, car with a fair value of $9,000 and $2,000 cash is received.
Hence, the amount of gain in the transaction = Car + Cash - Book value of truck
= 9,000 + 2,000 - 7,500
= $3,500
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