GEE Company and EYCH Inc. decided to exchange machineries on January 1, 2019. The machine of GEE (Machine G) was purchased in January 1, 2016 for $1,000,000. The estimated useful life of the machine is 10 years, with no residual value. On the date of the exchange, Machine G's fair value is $680,000. EYCH's machine (Machine H) was purchased on January 1, 2018, for $2,500,000. The estimated useful life of the machine is 5 years, with no residual value. The fair value of Machine H on the date of exchange is $2,100,000. Because of the difference in the fair values, included in the agreement is a stipulation wherein GEE shall pay $1,500,000. The exchange is considered to be with commercial substance. How much shall EYCH Inc. initially recognize Machine G? A. $600,000 B. $2,000,000 C. $680,000 D. $2,100,000
GEE Company and EYCH Inc. decided to exchange machineries on January 1, 2019. The machine of GEE (Machine G) was purchased in January 1, 2016 for $1,000,000. The estimated useful life of the machine is 10 years, with no residual value. On the date of the exchange, Machine G's fair value is $680,000. EYCH's machine (Machine H) was purchased on January 1, 2018, for $2,500,000. The estimated useful life of the machine is 5 years, with no residual value. The fair value of Machine H on the date of exchange is $2,100,000. Because of the difference in the fair values, included in the agreement is a stipulation wherein GEE shall pay $1,500,000. The exchange is considered to be with commercial substance. How much shall EYCH Inc. initially recognize Machine G?
A. $600,000
B. $2,000,000
C. $680,000
D. $2,100,000
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