Which of the following is true regarding recording the trade in of one asset for a similar asset for financial reporting purposes?

Question

Quizplus · Accepted Answer

When an asset is traded in for a similar asset, both the loss and the gain should be recorded in the financial statements. The loss is equal to the difference between the carrying amount of the old asset and the fair value of the new asset, while the gain is the difference between the fair value of the new asset and the amount paid for it. By recording both the loss and the gain, the financial statements reflect the economic impact of the transaction on the company.

Which of the Following Is True Regarding Recording the Trade