Calaveras Tire exchanged equipment for two pickup trucks. The book value and fair value of the equipment given up were $31,000 (original cost of $81,500 less accumulated depreciation of $50,500) and $22,500, respectively. Assume Calaveras paid $8,500 in cash and the exchange has commercial substance. (1) At what amount will Calaveras value the pickup trucks? (2) How much gain or loss will the company recognize on the exchange? (1) Value of pickup trucks (2)

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Calaveras Tire exchanged equipment for two pickup trucks. The book
value and fair value of the equipment given up were $31,000 (original
cost of $81,500 less accumulated depreciation of $50,500) and
$22,500, respectively. Assume Calaveras paid $8,500 in cash and the
exchange has commercial substance.
(1) At what amount will Calaveras value the pickup trucks?
(2) How much gain or loss will the company recognize on the exchange?
(1) Value of pickup trucks
(2)
Transcribed Image Text:Calaveras Tire exchanged equipment for two pickup trucks. The book value and fair value of the equipment given up were $31,000 (original cost of $81,500 less accumulated depreciation of $50,500) and $22,500, respectively. Assume Calaveras paid $8,500 in cash and the exchange has commercial substance. (1) At what amount will Calaveras value the pickup trucks? (2) How much gain or loss will the company recognize on the exchange? (1) Value of pickup trucks (2)
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