[Bluetoothray]

Fellow ninjas-in-training and Ninjas,

I’m trying to figure out why the gain here is 30k instead of 35k. Shouldn’t the gain be the difference between the FV of the machine received and the book value of the property being given up?

“A company exchanged land with an appraised value of $50,000 and an original cost of $20,000 for machinery with a fair value of $55,000. Assuming that the transaction has commercial substance, what is the gain on the exchange?”

Thanks!

[rythymknightxm]

The value of the asset given up is used in the calculation. If it can't be determined, THEN you use the fair value of the asset received.

[Bluetoothray]

Thanks!

[Author]

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