Safeco,Inc.owns a jet airplane with an original cost of $958,500 and accumulated depreciation of $644,800.The company exchanged the airplane for 50,000 shares of stock held by another company as an investment.The stock is valued at $7 per share.The gain or loss recognized on the exchange would be:

Question

Quizplus · Accepted Answer

The book value of the airplane is $313,700 ($958,500 - $644,800). The value of the stock received is $350,000 (50,000 shares x $7). The gain recognized is $36,300 ($350,000 - $313,700).