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ina Inn and Midwest Chicken exchanged assets. China Inn received a delivery truck and gave equipment. The fair value and book value of the equipment were $20,500 and $11,400 (original cost of $42,000 less accumulated depreciation of $30,600), respectively. To equalize market values of the exchanged assets, China Inn paid $8,700 in cash to Midwest Chicken. 1. At what amount did China Inn record the delivery truck

Sagot :

abiolataiwo2015

Answer:

1. $29,200

2. $9,100

Explanation:

1. Calculation to determine At what amount did China Inn record the delivery truck

Using this formula

Delivery truck amount=Fair value of the delivery truck+Cash paid

Let plug in the formula

Delivery truck amount=$20,500 + $8,700

Delivery truck amount=$29,200

Therefore The amount that China Inn record the delivery truck is $29,200

2. Calculation to determine How much gain or loss did China Inn recognize on the exchange

Using this formula

Gain of Exchange=Fair value of the delivery truck-Book value

Let plug in the formula

Gain of Exchange =$20,500- $11,400

Gain of Exchange=$9,100

Therefore The amount of gain or loss that China Inn recognize on the exchange is $9,100

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