In an exchange of plant assets that has commercial substance any difference between the fair value and the book value of the old plant asset is
A) recorded as a gain or loss.
B) recorded if a gain but is deferred if a loss.
C) recorded if a loss but is deferred if a gain.
D) deferred if either a gain or loss.

Question

Quizplus · Accepted Answer

Any difference between the fair value and the book value of the old plant asset is recorded as a gain or loss. This is in accordance with the principle of measuring assets at their fair value and recognizing any gains or losses that result from the exchange.

In an Exchange of Plant Assets That Has Commercial Substance