Below is information relative to an exchange of similar assets by Grand Forks Corp. Assume the exchange has commercial substance. $$\begin{array} { l l l c }
& { \text { Old Equipment } } && \text { Cash } \
& \text { Book Value } & \text { Fair Value } & \text { Paid } \
\text { Case A } & \$ 50,000 & \$ 60,000 & \$ 15,000 \
\text { Case B }& \$ 40,000 & \$ 35,000 & \$ 8,000
\end{array}$$
- In Case A, Grand Forks would record the new equipment at:
A) $65,000.
B) $75,000.
C) $50,000.
D) $60,000.

Question

Below is information relative to an exchange of similar assets by Grand Forks Corp. Assume the exchange has commercial substance. $$\begin{array} { l l l c } 
& { \text { Old Equipment } } && \text { Cash } \
& \text { Book Value } & \text { Fair Value } & \text { Paid } \
\text { Case A }  & \$ 50,000 & \$ 60,000 & \$ 15,000 \
\text { Case B }& \$ 40,000 & \$ 35,000 & \$ 8,000
\end{array}$$
- In Case A, Grand Forks would record the new equipment at:
A) $65,000.
B) $75,000.
C) $50,000.
D) $60,000.

Quizplus · Accepted Answer

$$\begin{array} { | l | r | l | } 
\hline \text { Equipment } ( \$ 60,000 + 15,000 ) & 75,000 & \
\hline \text { Cash } & & 15,000 \
\hline \text { Equipment-old (book value) } & & 50,000 \
\hline \text { Gain } & & 10,000 \
\hline
\end{array}$$

Below Is Information Relative to an Exchange of Similar Assets