FINANCIAL ACCOUNTING
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ISBN: 9781259964947
Author: Libby
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8. Rus exchanged a number of used trucks plus cash for semi-truck. The used trucks have a combined book value of $42,000 (Cost $64,000). Rus purchasing agent who is experienced in the second hand truck market, determined the used trucks have a FMV of $49,000. Also in addition to providing the trucks. Rus most also pay $11,000 cash for the semi truck
if the exchange has no commercial substance then what is the incremental impact on net income as compared to one that has a commercial substance?
(example: if the 1st exchange had interest expense of $500 with commercial substance but in this one the is no commercial substance and there was $0 of interest expense, your answer would be $500 because net income would be $500 higher without an interest expense charge)
Thank you
brenda
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