Marker Corp. exchanged an old truck for a piece of equipment and cash on January 1st 2019. The truck was purchased at a cost of $24,000 and accumulated depreciation at the time of the exchange is $17,000. As compensation for the truck, Marker received a piece of equipment with a fair value of $8,000 and $500 cash. How much gain would be recognized assuming this transaction DOES have commercial substance? Do not use dollar signs or decimals when inputting your answer.

Question

Eli Abbott

Business

18 December, 04:54

Marker Corp. exchanged an old truck for a piece of equipment and cash on January 1st 2019. The truck was purchased at a cost of $24,000 and accumulated depreciation at the time of the exchange is $17,000. As compensation for the truck, Marker received a piece of equipment with a fair value of $8,000 and $500 cash. How much gain would be recognized assuming this transaction DOES have commercial substance? Do not use dollar signs or decimals when inputting your answer.

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Answers (1)

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Jade Wyatt · Answer 1

There is a 1,500 gain

Explanation:

we have commercial subtance so we can recognize gain/loss

these will be the numebrs of the transaction:

truck

purchase 24,000

acc depreciation 17, 000

book value 7, 000

equipment 8,000

cash 500

total 8,500

received - given up = gain/loss

8,500 - 7,000 = 1,500 gain

the journal entry would be

Equipment 8,000 debit

cash 500 debit

acc dep truck 17,000 debit

Truck 24,000 credit

gain on disposal 1,500 credit