Question

 

ABC Company exchanged equipment used in its manufacturing operations for a similar piece of equipment used in the operations of XYZ Corporation.  The following information pertains to the exchange.  The exchange lacks commercial substance.

	ABC Company	XYZ Company
Equipment (costs)	$28,000	$34,000
Accumulated Depreciation	12,000	10,000
Fair Value of Equipment		28,500
Cash given up	7,000

Determine the Original Cost of the New Asset that ABC should report on their balance sheet as a result of this exchange as well as the gain or loss ABC should recognize on their CY Income Statement.

Historical Cost of New Equipment for ABC	Gain/Loss on the Exchange

*To record your answer for a gain, enter your answer as a positive number. If you want to report a loss, enter your answer as a negative number using () parenthesis. If no gain or loss is reported, enter your answer as NE for No Effect. Example: If you want to report a loss of $2,000, enter your answer as (2000). Do not use $ dollar signs or commas to record your answer.

Flag this Question

Question 101 pts

Using the same information presented in #9 above, determine the Original cost of the New Equipment for XYZ and the Gain/Loss that XYZ can recognize.

Original Cost of New Equipment to XYZ	Gain/Loss to be Recognized

Answer 1