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In: Accounting

Bogut Co. and Nadal exchanged productive assets. The asset surrendered by Bogut had a carrying amount...

Bogut Co. and Nadal exchanged productive assets. The asset surrendered by Bogut had a carrying amount and a list price of $10,000 and $15,000, respectively. The asset received by Bogut had a fair value of $13,000. If Bogut paid Nadal $2,000 in cash, Bogut should recognize a gain (loss) of

Group of answer choices

$(4,000)

$0

$2,000

$1,000

Solutions

Expert Solution

Answer:

The cost of assets acquired in exchange should be measured at the fair value of assets given up or assets received unless exchange transaction lacks commercial substances or Fair value of neither the asset received nor the asset is given up is reliability measurable.

Calculation of Gain or Loss on the exchange of assets:

Particulars Amount
The list price of productive assets $15,000
Add: Consideration paid $2,000 $17,000
Less: Fair Value of assets received $13,000
Loss on the exchange of productive assets ($4,000)

Accordingly, Option (a) i.e. ($4,000) is the corerct answer.

ekkarill92 answered 2 years ago
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