Brooklyn Market recently traded in store fixtures. The exchange had commercial substance. The old fixtures had a cost of $70,000 and accumulated depreciation of $58,000. Brooklyn paid $99,000 for the new store fixtures. These new fixtures had a market value of $133,000. There is a loss of $22,000 on this exchange.

Question

Quizplus · Accepted Answer

Based on the information given, there is a gain of $4,000 on this exchange, not a loss of $22,000. The gain is calculated as the difference between the cost of the old fixtures ($70,000) minus the accumulated depreciation ($58,000), which equals $12,000, and the cost of the new fixtures ($99,000), which results in a gain of $4,000 ($99,000 - $95,000). Therefore, the statement is false.

Brooklyn Market Recently Traded in Store Fixtures