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A truck costs $95,000 when new and has accumulated depreciation of $75,000. Suppose Frank Towing exchanges the truck for a new truck. The new truck has a market value of $78,000, and Frank pays cash of $52,000. Assume the exchange has commercial substance. What is the result of this exchange? A. No gain or loss. B. Gain of $6,000. C. Gain of $58,000. D. Loss of $6,000.

A truck costs $95,000 when new and has accumulated depreciation of $75,000. Suppose Frank Towing exchanges the truck for a new truck. The new truck has a market value of $78,000, and Frank pays cash of $52,000. Assume the exchange has commercial substance. What is the result of this exchange? A. No gain or loss. B. Gain of $6,000. C. Gain of $58,000. D. Loss of $6,000.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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A truck costs $95,000 when new and has accumulated depreciation of $75,000. Suppose Frank Towing exchanges the truck for a new truck. The new truck has a market value of $78,000, and Frank pays cash of $52,000. Assume the exchange has commercial substance. What is the result of this exchange? A. No gain or loss. B. Gain of $6,000. C. Gain of $58,000. D. Loss of $6,000.
Transcribed Image Text:A truck costs $95,000 when new and has accumulated depreciation of $75,000. Suppose Frank Towing exchanges the truck for a new truck. The new truck has a market value of $78,000, and Frank pays cash of $52,000. Assume the exchange has commercial substance. What is the result of this exchange? A. No gain or loss. B. Gain of $6,000. C. Gain of $58,000. D. Loss of $6,000.
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