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18 August, 03:49

Marker Corp. exchanged an old truck for a piece of equipment and cash on January 1st 2019. The truck was purchased at a cost of $24,000 and accumulated depreciation at the time of the exchange is $17,000. As compensation for the truck, Marker received a piece of equipment with a fair value of $8,000 and $500 cash. How much gain would be recognized assuming this transaction DOES have commercial substance? Do not use dollar signs or decimals when inputting your answer.

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  1. 18 August, 04:17
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    There is a 1,500 gain

    Explanation:

    we have commercial subtance so we can recognize gain/loss

    these will be the numebrs of the transaction:

    truck

    purchase 24,000

    acc depreciation 17, 000

    book value 7, 000

    equipment 8,000

    cash 500

    total 8,500

    received - given up = gain/loss

    8,500 - 7,000 = 1,500 gain

    the journal entry would be

    Equipment 8,000 debit

    cash 500 debit

    acc dep truck 17,000 debit

    Truck 24,000 credit

    gain on disposal 1,500 credit
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