When assets are exchanged in a transaction involving commercial substance, how is the gain or loss...

When assets are exchanged in a transaction involving commercial substance, how is the gain or loss on disposal of plant assets computed?

Expert Solution

--The gain or loss on asset exchanged in transaction involving commercial substance is calculated as shown below:

A	Fair Value of new asset received
	*LESS:*
	Original Cost of asst given up in exchange
	Less: Accumulated Depreciation on that asset
B	Book Value of Asset exchanged
C	Cash paid, if any
D = A - B - C	Gain (Loss) on exchange

Lets, take an example.

A	Fair Value of new asset received		$ 112,500
	*LESS:*
	Original Cost of asst given up in exchange	$ 144,000
	Less: Accumulated Depreciation on that asset	$ 60,000
B	Book Value of Asset exchanged		$ 84,000
C	Cash paid, if any		$ 22,500
D = A - B - C	Gain (Loss) on exchange		$ 6,000

ekkarill92 answered 1 year ago

How are fats cells involved with weight loss, gain, and loss?

gain or loss is recognized on the transfer of assets from one corporation to another for...

gain or loss is recognized on the transfer of assets from one corporation to another for stock or securities of the transferee corporation as long as the transferor owns 80% of the transferee's stock after the transaction. Create a scenario where the transfer of property to a controlled corporation under Section 351 of the Internal Revenue Code (IRC) results in taxation to the transferor. Speculate as to the reasons that gain treatment in the current year may be preferred to...

Barbara sold three assets during 2017. How much and what kind of gain or loss does...

Barbara sold three assets during 2017. How much and what kind of gain or loss does she recognize from each sale? What tax rate applies to the net gain if Barbara's ordinary income is taxed at 25 percent? a. On February 25 she sold 200 shares of XYZ stock for $19,000. She bought that stock for $16,000 on February 23, 2016. b. On July 20 she sold an antique automobile for $30,000 that she purchased for $31,000 on July 21,...

True/False. For exchanges of plant assets with commercial substance, the new asset received will be recorded...

True/False. For exchanges of plant assets with commercial substance, the new asset received will be recorded at its market value.

how do you calculate welfare loss/gain?

e0. Which of the following is NOT taken into account when determining if gain or loss...

e0. Which of the following is NOT taken into account when determining if gain or loss should be recognized by the shareholder on the transfer of property to a corporation in exchange for a controlling interest in stock of the corporation. a) Ownership of a least 80% of all stock b) Receiving money in addition to stock c) Fair market value of property transferred to corporation by shareholder d) Mortgage on shareholder’s property assumed by corporation. e) None of the...

For a gain on sale of land, how would you book the transaction? Let's say the...

For a gain on sale of land, how would you book the transaction? Let's say the property was purchased for 100,000 (no depreciation because it's land) and sold 3 years later for $175,000. Please show the journal entries upon acquisition and disposition. Would this be a capital gain or ordinary gain? Do you have enough facts to answer if it would be capital or ordinary?

1. Compare the risk of loss of full return of principal when investing in a commercial...

1. Compare the risk of loss of full return of principal when investing in a commercial paper, reverse repurchase agreement and treasury bills

Under the Uniform Commercial Code (UCC), risk of loss passes to the buyer (A) when the...

Under the Uniform Commercial Code (UCC), risk of loss passes to the buyer (A) when the goods are delivered to the carrier if the terms are FOB destination (B) when the goods are placed on the seller’s loading dock if the terms are FOB destination (C) when the goods are placed on the seller’s loading dock if the terms are FOB shipping point (D) when the goods are delivered to the carrier if the terms are FOB shipping point

How should a material unusual or infrequent gain or loss be disclosed in the financial statements?

Question