Calaveras Tire exchanged equipment for two pickup trucks. The book value and fair value of the equipment given up were $35,000 (original cost of $87,500 less accumulated depreciation of $52,500) and $46,500, respectively. Assume Calaveras paid $6,500 in cash and the exchange lacks commercial substance. (1) At what amount will Calaveras value the pickup trucks? (2) How much gain or loss will the company recognize on the exchange? (1) Value of pickup trucks (2) Gain on exchange
Calaveras Tire exchanged equipment for two pickup trucks. The book value and fair value of the equipment given up were $35,000 (original cost of $87,500 less accumulated depreciation of $52,500) and $46,500, respectively. Assume Calaveras paid $6,500 in cash and the exchange lacks commercial substance. (1) At what amount will Calaveras value the pickup trucks? (2) How much gain or loss will the company recognize on the exchange? (1) Value of pickup trucks (2) Gain on exchange
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Calaveras Tire exchanged equipment for two pickup trucks. The book value and fair value of the equipment given up were $35,000
(original cost of $87,500 less accumulated depreciation of $52,500) and $46,500, respectively. Assume Calaveras paid $6,500 in
cash and the exchange lacks commercial substance.
(1) At what amount will Calaveras value the pickup trucks?
(2) How much gain or loss will the company recognize on the exchange?
(1) Value of pickup trucks
(2) Gain on exchange
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