When an exchange of similar assets involves a gain,
A) the recorded amount of the new asset is the cost of the old asset plus any cash paid.
B) the recorded amount of the new asset is its fair market value less any cash paid.
C) the recorded amount of the new asset is the net book value of the old asset plus any cash paid.
D) None of these are true.

Question

Quizplus · Accepted Answer

When an exchange of similar assets involves a gain, the recorded amount of the new asset is the net book value of the old asset plus any cash paid, as gains are not recognized in exchanges of similar assets.

When an Exchange of Similar Assets Involves a Gain