Laroche Co.exchanged similar nonmonetary assets with Karr Co.No cash was exchanged.The carrying amount of the asset surrendered by Laroche exceeded both the fair value of the asset received and Karr's carrying amount of that asset.Laroche should recognize the difference between the carrying amount of the asset it surrendered and
A)the fair value of the asset it received as a loss.
B)the fair value of the asset it received as a gain.
C)Karr's carrying amount of the asset it received as a loss.
D)Karr's carrying amount of the asset it received as a gain.

Question

Quizplus · Accepted Answer

When the carrying amount of the asset surrendered by Laroche exceeds both the fair value of the asset received and Karr's carrying amount of that asset, Laroche should recognize the difference between the carrying amount of the asset it surrendered and the fair value of the asset it received as a loss. This is because Laroche has given up an asset with a higher value than what it has received in return, resulting in a loss.