Rydell Company exchanged business equipment (initial cost $55,250; accumulated depreciation $25,450)for like-kind equipment worth $44,000 and $2,000 cash.As a result,Rydell must recognize:

Question

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Rydell Company received $2,000 cash in addition to the like-kind equipment, which is considered "boot" in a like-kind exchange. The receipt of boot requires recognition of gain to the extent of the lesser of the boot received or the realized gain. Here, the realized gain is $14,200 ($44,000 + $2,000 - $29,800), and the boot is $2,000, so Rydell must recognize a $2,000 ordinary gain.

Rydell Company Exchanged Business Equipment (Initial Cost $55,250; Accumulated Depreciation