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 B, Grand Forks would record a gain/(loss) of:
A) $5,000.
B) $3,000.
C) ($5,000).
D) ($3,000).

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 B, Grand Forks would record a gain/(loss) of:
A) $5,000.
B) $3,000.
C) ($5,000).
D) ($3,000).

Quizplus · Accepted Answer

$$\begin{array} { | l | r | r | } 
\hline \text { Equiprnent } ( \$ 35,000 + \mathbf { 8 , 0 0 0 } ) & 43,000 & \
\hline \text { Loss } ( \$ 40,000 - 35,000 ) & 5,000 & \
\hline \text { Cash } & & \mathbf { 8 , 0 0 0 } \
\hline \text { Equiprnert-old (book value) } & & \mathbf { 4 0 , 0 0 0 } \
\hline
\end{array}$$

Below Is Information Relative to an Exchange of Similar Assets