Pensacola Inc. purchased equipment on January 1, 2016 for $135,000.After 3 years Pensacola exchanged the equioment for a truck from Mami, inc. in a exchange. The balance in the Accumulated Depreciation account at the time of the exchange was $75,000 Assume the exchange lacks commercial substance. At the time of the exchange, the fair value of the equipment was $77,000 and the fair value of the truck was $57,000. Miami paid $20,000 cashvboot to Pensacola monetan What is the cost basis of the truck acquired by Pensacola? $44,415 $52,585 O $57,000 O $40,000 O None of the above

Pensacola Inc. purchased equipment on January 1, 2016 for $135,000.After 3 years Pensacola exchanged the equioment for a truck from Mami, inc. in a exchange. The balance in the Accumulated Depreciation account at the time of the exchange was $75,000 Assume the exchange lacks commercial substance. At the time of the exchange, the fair value of the equipment was $77,000 and the fair value of the truck was $57,000. Miami paid $20,000 cashvboot to Pensacola monetan What is the cost basis of the truck acquired by Pensacola? $44,415 $52,585 O $57,000 O $40,000 O None of the above

SWFT Comprehensive Volume 2019

42nd Edition

ISBN:9780357233306

Author:Maloney

Publisher:Maloney

Chapter14: Property Transactions: Capital Gains And Losses, § 1231, And Recapture Provisions

Section: Chapter Questions

Problem 32CE

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GEE Company and EYCH Inc. decided to exchange machineries on January 1, 2019. The machine of GEE (Machine G) was purchased in January 1, 2016 for ₱1,000,000. The estimated useful life of the machine is 10 years, with no residual value. On the date of the exchange, Machine G’s fair value is ₱680,000. EYCH’s machine (Machine H) was purchased on January 1, 2018, for ₱2,500,000. The estimated useful life of the machine is 5 years, with no residual value. The fair value of Machine H on the date of exchange is ₱2,100,000. Because of the difference in the fair values, included in the agreement is a stipulation wherein GEE shall pay ₱1,500,000. The exchange is considered to be with commercial substance. How much is the gain(loss) from exchange that should be recognized by GEE Company? A. ₱ 80,000 - GAIN B. ₱ 20,000 - GAIN C. ₱ 1,500,000 - L0SS D. ₱ 20,000 - LOSS with solution
GEE Company and EYCH Inc. decided to exchange machineries on January 1, 2019. The machine of GEE (Machine G) was purchased in January 1, 2016 for $1,000,000. The estimated useful life of the machine is 10 years, with no residual value. On the date of the exchange, Machine G's fair value is $680,000. EYCH's machine (Machine H) was purchased on January 1, 2018, for $2,500,000. The estimated useful life of the machine is 5 years, with no residual value. The fair value of Machine H on the date of exchange is $2,100,000. Because of the difference in the fair values, included in the agreement is a stipulation wherein GEE shall pay $1,500,000. The exchange is considered to be with commercial substance. How much shall EYCH Inc. initially recognize Machine G? A. $600,000 B. $2,000,000 C. $680,000 D. $2,100,000
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