Ronald exchanged similar assets with Silver Company in a transaction without commercial substance. Ronald gave up equipment that had a net book value of $47,000 (fair value $49,000)and Silver exchanged equipment with a net book value of $36,000 (fair value $35,000). What is the correct value at which Ronald should record the new equipment?

Question

Quizplus · Accepted Answer

In a transaction without commercial substance, the new asset is recorded at the book value of the asset given up, which is $47,000 in this case.

Ronald Exchanged Similar Assets with Silver Company in a Transaction