Rogaine Company exchanged inventory items that cost $47, 000 and normally sold for $65, 000 for a new delivery truck with a list price of $67, 000.The delivery truck should be recorded on Rogaine's books at

Question

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The delivery truck should be recorded at the fair value of the asset given up, which is the normal selling price of the inventory ($65,000), assuming the fair value is more clearly evident than the fair value of the truck received. This follows the accounting principle of recording assets at their fair value at the time of exchange.

Rogaine Company Exchanged Inventory Items That Cost $47, 000 and Normally