The Pizza Store trades in a delivery car for a newer model. The old delivery car has a cost of $9000 and accumulated depreciation of $8000. The Pizza Store pays cash of $5000. The fair value of the newer car is $20,000. What is the gain or loss for the Pizza Store on the exchange of vehicles?

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The Pizza Store has a book value of $1000 for the old car ($9000 cost - $8000 accumulated depreciation). The Pizza Store pays $5000 cash and receives a new car worth $20,000. The Pizza Store has a gain of $14,000 ($20,000 - $1000 - $5000).

The Pizza Store Trades in a Delivery Car for a Newer