XYZ Corp exchanged equipment with ABC Corp. The following information pertains to the exchange: XYZ Corp...
XYZ Corp exchanged equipment with ABC Corp. The following information pertains to the exchange:
|
XYZ Corp |
ABC Corp |
|
|
Equipment |
$100,000 |
$70,000 |
|
Accumulated Depreciation |
$50,000 |
$20,000 |
|
Fair Value Equipment |
$60,000 |
$40,000 |
|
Cash given up |
$20,000 |
What is the gain that XYZ Corp can recognize on the transaction? Assume there is no commercial substance.
Homework Answers
Gain that XYZ Corp will not recognize any gain on the transaction as there is no commercial substance.
| No Commercial Substance | ||||
| XYZ Corp. | ||||
| Date | Particulars | L.F | Amount ($) | Amount ($) |
| Equipment | 30,000 | |||
| Cash | 20,000 | |||
| Accumulated depreciation | 50,000 | |||
| Equipment | 100,000 | |||
| (For equipment exchanged) | ||||
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