Cullumber Company traded machinery with a book value of $595000
and a fair value of $955000. It received in exchange from Swifty
Corporation a machine with a fair value of $859500 and cash of
$95500. Swifty’s machine has a book value of $907250. What amount
of gain should Cullumber recognize on the exchange (assuming lack
of commercial substance)?
$95500 |
$360000 |
$ -0- |
$36000 |
Gain to be recognized = [95,500/(859,500+95,500)] * (955,000-595,000) = (95,500/955,000)*360,000 = 36,000 Option D is the answer |
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Cullumber Company traded machinery with a book value of $595000 and a fair value of $955000....
Pharoah Company traded machinery with a book value of $480,000 and a fair value of $1,070,000. It received in exchange from Waterway Industries a machine with a fair value of $963,000 and cash of $107,000. Waterway’s machine has a book value of $1,016,500. What amount of gain should Pharoah recognize on the exchange (assuming lack of commercial substance)? **Please show all work** The correct answer is $59,000 but not sure how to get it.
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