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.

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter19: Lease Financing

Section: Chapter Questions

Problem 1P: Reynolds Construction (RC) needs a piece of equipment that costs 200. RC can either lease the...

See similar textbooks

Similar questions

What is the result of this exchange? General accounting
A truck costs $82,000 when new and has accumulated depreciation of $70,000. Suppose Frank Towing exchanges the truck for a new truck. The new truck has a market value of $79,000, and Frank pays cash of $52,000. Assume the exchange has commercial substance. What is the result of this exchange? OA. No gain or loss OB. Gain of $15,000 OC. Gain of $67,000 OD. Loss of $15,000
Mansukhbhai
Provide Answer with calculation and explanation
Johnson Co. trades in a machine with a book value of $10,000 for a new machine with a list value of $12,000. In addition to the old machine, Johnson also pays $5,000 cash. The gain or loss on this exchange (which has commercial substance) would be how much? Multiple choice question. $2,000 loss $2,000 gain $3,000 loss $3,000 gain
Need help with this financial accounting question not use ai
XMohan & Co. is considering the purchase of machine. Two machines X and Y each Costing Rs.50, 000 are available. Earnings after taxes before depreciation are expected to be as under: Year 1 2 3 4 5 Machine 'X' 15000 20000 25000 15000 10000 (Rs.) Machine 'Y' (Rs.) 5000 15000 20000 30000 20000 Estimate the two alternatives according to: (a) Payback method, and (b) NPV method a discount rate of 10% is to be used.
Give me Answer of this Question.. need correct option
Answer provide pls
9. JK Corp traded some used Machinery with book value of $60,000 (accumulated depr $50,000) and a FMV of $100,000 for a machine with a FMV of $90,000. Received $10,000 cash. Assume the exchange, however did not result in a change of future cash flow for either party. What is the dollar amount basis of the new asset for JK Corp? Thank you brenda
Harper Corporation recently sold a used machine for $50,000. The machine had a book value of $75,000 at the time of the sale. What is the after-tax cash flow from the sale, assuming the company's marginal tax rate is 25 percent? Select one: a. $50,000 b. $43,750 c. $56,250 d. $75,000
Wolf Computer exchanged a machine with a book value of $40,000 and a fair value of $45,000 for a very similar machine. In addition, Wolf paid $6,000 as part of the exchange. Wolf should recognize: Multiple Choice ● A gain of $11,000. A loss of $1,000. A gain of $5,000. No gain or loss.