Nirvana Company traded in a automatic pressing machine for a manual pressing machine owned by Dodson...
Nirvana Company traded in a automatic pressing machine for a manual pressing machine owned by Dodson Company. These machines have similar future cash flows. Nirvana's old machine cost $271,122 and had a net book value of $179,037. The old machine had a fair value of $192,892. They received $30000 boot in the deal. What is the amount of gain or loss from this transaction? If you calculate a loss, use a minus sign, i.e. -8000. If you determine the gain or loss can't be recognized, enter zero. Round any percentages used to two decimal places, i.e. 56.78%.
Answer is : 2154.83
Homework Answers
Calculation of Gain
| Fair Value | 192,892.00 |
| Book Value | 179,037.00 |
| Gain | 13,855.00 |
Gain from the Transaction = 30,000/192,892 x 13,855
=2,154.83
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