F traded in a business automobile worth $4,500 subject to $2,000 of outstanding debt, for a new automobile worth $10,500.F signed a note for $8,000, and no cash changed hands.What is F's amount realized on this trade?
A)$2,000
B)$4,500
C)$10,500
D)Indeterminable from the facts given

Question

Quizplus · Accepted Answer

Amount realized is the value of property received in exchange for the old property. Here, F received a new automobile worth $10,500 in exchange for the old automobile subject to outstanding debt of $2,000. Therefore, the value of the property received by F is $10,500.

The fact that F signed a note for $8,000 does not change the amount realized, as no cash changed hands. So, the amount realized by F on this trade is $10,500.

Therefore, the correct answer is B.

F Traded in a Business Automobile Worth $4,500 Subject to $2,000