What is the result of this exchange on these financial accounting question? Horizon Transport owns a truck that costs $100,000 when new andhas accumulated depreciation of $80,000. Horizon exchanges thistruck for a new one with a market value of $85,000 and pays $60,000in cash. Assume the exchange has commercial substance.What is the result of this exchange?A. No gain or loss.B. Gain of $5,000.C. Gain of $65,000.D. Loss of $5,000.

Step 1: Define Gain or Loss on Exchange with Commercial SubstanceWhen an asset exchange has…

Answered: Horizon Transport owns a truck that…

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter11: Long-term Assets

Section: Chapter Questions

Problem 14PB: Garcia Co. owns equipment that costs $150,000, with accumulated depreciation of $65,000. Garcia...

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Caleb Company owns a machine that had cost $46,000 with accumulated depreciation of $20,200. Caleb exchanges the machine for a newer model that has a market value of $56,000. Record the exchange assuming Caleb paid $31,800 cash and the exchange has commercial substance. Record the exchange assuming Caleb paid $23,800 cash and the exchange has commercial substance.
Caleb Co. owns a machine that had cost $42,400 with accumulated depreciation of $18,400. Caleb exchanges the machine for a newer model that has a market value of $52,000. 1. Record the exchange assuming Caleb paid $30,000 cash and the exchange has commercial substance. 2. Record the exchange assuming Caleb paid $22,000 cash and the exchange has commercial substance.
Gilly Construction trades in an old tractor for a new tractor, receiving a $29,000 trade-in allowance and paying the remaining $83,000 in cash. The old tractor had cost $96,000 and had accumulated depreciation of $52,500. Answer the following questions assuming the exchange has commercial substance. 1. What is the book value of the old tractor at the time of exchange? 2. What is the loss on this asset exchange? 3. What amount should be recorded (debited) in the asset account for the new tractor?
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Arca Salvage purchased equipment for $10,000. Arca recorded total depreciation of $8,000 on the equipment. Assume that Arca exchanged the old equipment for new equipment, paying $4,000 cash. The fair market value of the new equipment is $5,000. Journalize Arca's exchange of equipment. Assume this exchange has commercial substance. Let's begin by calculating the gain or loss on the exchange of equipment. (Enter a loss with a minus sign or parentheses.) Market value of assets received Less: Book value of asset exchanged Cash paid Gain or (Loss)
Calaveras Tire exchanged equipment for two pickup trucks. The book value and fair value of the equipment given up were $20,000 (original cost of $65,000 less accumulated depreciation of $45,000) and $17,000, respectively. Assume Calaveras paid $8,000 in cash and the exchange has 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?
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
China Inn and Midwest Chicken exchanged assets. China Inn received a delivery truck and gave equipment. The fair value and book value of the equipment were $17,000 and $10,000 (original cost of $35,000 less accumulated depreciation of $25,000), respectively. To equalize market values of the exchanged assets, China Inn paid $8,000 in cash to Midwest Chicken. At what amount did China Inn record the delivery truck? How much gain or loss did China Inn recognize on the exchange?
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Hinrich Company traded machinery with a book value of $120,000 and a fair value of $200,000. It received in exchange from Noach Company a machine with a fair value of $180,000 and cash of $20,000. Noach's machine has a book value of $190,000. The transaction lacks commercial substance. What amount of gain should Hinrich recognize on the exchange? O $-0- O $8.000 $20,000 O $80,000
Consider each of the following independent situations: a. GYT Co. exchanges a machine that cost $4,000 and has accumulated amortization of $2,560 for a similar machine. GYT also receives $25 in the exchange. The fair market value of the old asset is $750. The fair market value of the new asset is $725. There is no commercial substance to the transaction. b. FST Co. exchanges a machine that cost $4,000 and has accumulated amortization of $3,560 for a similar machine. FST also receives $25 in the exchange. The fair market value of the old asset is $750. The fair market value of the new asset is $725. There is no commercial substance to the transaction. c. LKC Co. pays $250 and exchanges a machine that cost $3,000 and has accumulated amortization of $1,900 for a similar machine. The fair market value of the old asset is undeterminable. The fair market value of the new asset is $690. The transaction has commercial substance. d. HRT Co. pays $250 and exchanges a…
Mariot trades in its old equipment (with the following carrying values) for new equipment. Mariot received $4,000 cash on the exchange. The fair value of the new equipment is $14,000. Original cost of old equipment : $10,000 Accumulated Depreciation on old equipment: $6,000 If the transaction lacks commercial substance, what amount does Mariot assign to the new equipment?

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