A machine costing P120,000, withaccumulated depreciation of P95,000, and afair market value of P27,500, was exchangedfor a new machine with a fair value ofP135,000 and the proper amount of cash ispaid. The exchange has commercialsubstance. The amount of cash involved inthe exchange amounts to

Commercial substance refers to the economic reality of a transaction, which considers the underlying…

Answered: A machine costing P120,000, with…

A machine costing P120,000, with accumulated depreciation of P95,000, and a fair market value of P27,500, was exchanged for a new machine with a fair value of

Financial Accounting

15th Edition

ISBN:9781337272124

Author:Carl Warren, James M. Reeve, Jonathan Duchac

Publisher:Carl Warren, James M. Reeve, Jonathan Duchac

Chapter10: Long-term Assets: Fixed And Intangible

Section: Chapter Questions

Problem 28E

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Question

A machine costing P120,000, with
accumulated depreciation of P95,000, and a
fair market value of P27,500, was exchanged
for a new machine with a fair value of
P135,000 and the proper amount of cash is
paid. The exchange has commercial
substance. The amount of cash involved in
the exchange amounts to

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A machine costing P120,000, with accumulated depreciation of P95,000, with a fair market value of P27,500, was exchanged for a new machine with a fair value of P135,000 and the proper amount of cash is paid. The exchange has commercial substance. The gain/loss to be recorded on the exchange is
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Subject :- Accounting
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