Hartwell Trucking traded a used truck with a book value of $1,700 and a fair market value of $2,300 for a new truck with a list price of $17,800. Hartwell agreed to pay $13,000 in cash for the exchange in addition to giving up the used truck. Assuming the exchange has commercial substance, at what amount should the new truck be recorded?
A) $17,800
B) $15,300
C) $14,700
D) None of these

Question

Quizplus · Accepted Answer

The new truck should be recorded at the fair value of the exchange, which is the list price of $17,800 minus the total consideration paid of $13,000 plus the fair market value of the used truck of $2,300, which equals $15,300. Therefore, choice B is the correct answer.

Hartwell Trucking Traded a Used Truck with a Book Value