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Texarkana Company exchanged equipment that cost $85,000 and has accumulated depreciation of $29,800 and a fair value of $60,000. It receives in exchange an equipment with a fair value of $48,000 and received $12,000 cash. The exchange lacks commercial substance. The gain to be recognized from the exchange is __________.

Respuesta :

Answer:

$4,800

Explanation:

Data provided in the question:

Cost = $66,000

Accumulated depreciation = $30,000

Book value = Cost - Accumulated depreciation

= $66,000 - $30,000

= $36,000

Now,

Fair value = $48,000 + $12,000

= $60,000

Thus,

Gain = $60,000 - $36,000

= $24,000

Therefore,

Gain to be recognized = $24,000 × [ 12,000 ÷ 60,000 ]

= $4,800

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