Hartney Company and Indoy Company had an exchange of productive assets. Hartney Company exchanges a building for Indoy's equipment. The following information are as follows: Hartney (Machine)Indoy (Equipment)Cost of asset exchangedP900,000P800,000Accumulated depreciation 540,000 320,000Fair value of asset exchanged 400,000 350,000Cash received (paid) 50,000 (50,000)Assuming that the transaction has a commercial substance, how much should Indoy recognize gain/loss in the exchange? (Note: Indicate "( )" if loss)

Gain or loss on Exchange:-When a company exchanges assets for another asset from another company, if…

Answered: Hartney Company and Indoy Company had…

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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Hartney Company and Indoy Company had an exchange of productive assets. Hartney Company exchanges a building for Indoy's equipment. The following information are as follows:

	Hartney (Machine)	Indoy (Equipment)
Cost of asset exchanged	P900,000	P800,000
Accumulated depreciation	540,000	320,000
Fair value of asset exchanged	400,000	350,000
Cash received (paid)	50,000	(50,000)

Assuming that the transaction has a commercial substance, how much should Indoy recognize gain/loss in the exchange? (Note: Indicate "( )" if loss)

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