Use the following information for questions.
Equipment that cost $81,000 and has accumulated depreciation of $30,000 is exchanged for equipment with a fair value of $48,000 and $12,000 cash is received.The exchange has commercial substance.
-The gain to be recognized from the exchange is

Question

Quizplus · Accepted Answer

The gain is calculated as the difference between the fair value of the new equipment plus cash received and the book value of the old equipment. The book value of the old equipment is $81,000 - $30,000 = $51,000. The total received is $48,000 (fair value of new equipment) + $12,000 (cash) = $60,000. The gain is $60,000 - $51,000 = $9,000.

Use the Following Information for Questions