# 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 lossGain of \$5,000Loss of \$5,000Gain of \$45,000

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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
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Step 1

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

Step 2

Calculate the result of th...

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