Rene exchanged similar assets with Simone Company in a transaction with commercial substance. Rene gave up equipment that had a net book value of $47,000 (fair value $49,000)and Simone exchanged equipment with a net book value of $36,000 (fair value $35,000). What is the correct value at which Simone should record the new equipment?

Question

Quizplus · Accepted Answer

Simone should record the new equipment at its fair value, which is $35,000, as per the accounting standards for exchanges with commercial substance.

Rene Exchanged Similar Assets with Simone Company in a Transaction