Numbers 7 and 8 Below is the information relative to an exchange of asset by Mimi Bernan Company. The exchange has commercial substance in Case1 and without commercial substance in Case 2. Old Equipment Book value Fair value Cash paid 15,000 Case 1 75,000 85,000 75.000 Case 2 50.000 7.000 3) What is the initial cost of the new equipment under Case 1? A 90,000 B. 100,000 C. 70.000 D. 60,000 4) What is the gain or loss in exchange should Mimi Bernan Company under Case 1? A 10.000 gain B. 10,000 loss C. 15.000 gain D. Zero 5) What is the initial cost of the new equipment under Case 2? A 57,000 B. 82,000 C. 43.000 D. 68.000
Numbers 7 and 8 Below is the information relative to an exchange of asset by Mimi Bernan Company. The exchange has commercial substance in Case1 and without commercial substance in Case 2. Old Equipment Book value Fair value Cash paid 15,000 Case 1 75,000 85,000 75.000 Case 2 50.000 7.000 3) What is the initial cost of the new equipment under Case 1? A 90,000 B. 100,000 C. 70.000 D. 60,000 4) What is the gain or loss in exchange should Mimi Bernan Company under Case 1? A 10.000 gain B. 10,000 loss C. 15.000 gain D. Zero 5) What is the initial cost of the new equipment under Case 2? A 57,000 B. 82,000 C. 43.000 D. 68.000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
7
Transcribed Image Text:Numbers 7 and 8
Below is the information relative to an exchange of asset by Mimi Bernan Company. The exchange has commercial
substance in Case1 and without commercial substance in Case 2.
Old Equipment
Book value
Fair value
Cash paid
15,000
Case 1
75,000
50,000
85,000
75.000
Case 2
7.000
3) What is the initial cost of the new equipment under Case 1?
A 90,000
B. 100,000
с.
70.000
D. 60,000
4) What is the gain or loss in exchange should Mimi Bernan Company under Case 1?
A 10,000 gain
B. 10,000 loss
C. 15.000 gain
D. Zero
5) What is the initial cost of the new equipment under Case 2?
A 57,000
B. 82.000
С. 43.000
D. 68,000
6) What is the gain or loss in exchange should Mimi Bernan Company under Case 2?
A 25,000 gain
B. 25.000 loss
C.
7,000 loss
D. Zero
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