Neil Limited sold a business to Howell Limited for $60 000. All assets were recorded by the acquiree at their fair values as follows: Land $30 000 Inventory $20 000; Accounts receivable $4000. When recording the sale, the acquiree recognises:

Question

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The total fair value of the assets is $54,000 ($30,000 + $20,000 + $4,000). Since the business was sold for $60,000, the acquiree recognizes a gain on sale of $6,000 ($60,000 - $54,000).

Neil Limited Sold a Business to Howell Limited for $60