Goetz Construction Company constructed a shed for Paramount Industries.Instead of giving cash,Paramount Industries,gave Goetz Construction Company a used delivery truck originally costing Paramount Industries,$52,000.The book value for the delivery truck on the financial statements of Paramount Industries showed the delivery truck with a value of $40,000.A new delivery truck is currently selling for $44,000,and an independent appraiser said the fair value of the used delivery truck is $48,000.What value should Paramount Industries assign to the shed on its financial statements?
A)$39,000
B)$52,000
C)$40,000
D)$44,000
E)$48,000

Question

Quizplus · Accepted Answer

The value assigned to the shed should be based on the fair value of the used delivery truck, which is $48,000, as per the independent appraiser. This is because in non-monetary exchanges, the fair value of the asset given up or received is used to record the transaction, unless the fair value is not readily determinable, in which case the book value may be used. In this case, the fair value is clearly indicated.

Goetz Construction Company Constructed a Shed for Paramount Industries