Asked Jan 10, 2020

A truck costs $50,000 when new and has accumulated depreciation of $35,000. Suppose Wilson Towing exchanges the truck for a new truck. The new truck has a market value of $60,000, and Wilson pays cash of $40,000. Assume the exchange has commercial substance. What is the result of this exchange?

  • No gain or loss
  • Gain of $5,000
  • Loss of $5,000
  • Gain of $45,000

Expert Answer

Step 1

Book value of old truck = $50,000 - 35,000 = $15,000

Step 2

Calculate the result of th...

Accounting homework question answer, step 2, image 1

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