Here's the question related to nonmonetary exchange vs monetary
Someone want to explain to me why this question in Becker is listed as being correct?
On January 2, Elbert's Delivery Company and Wanda's Exporters exchanged similar delivery trucks in an exchange that lacks commercial substance. Data relative to the trucks follow:
Elbert's truck
Original cost
$10,000
Accumulated depreciation as of January 2
8,000
Fair market value
3,000
Wanda's truck
Book value
$15,000
In the exchange, Elbert paid Wanda cash of $10,000. Elbert's Delivery Company should record the new truck at:
a.$13,000
b.$12,000
c.$8,000
d.$10,000
Explanation
Choice “a” is correct. The new truck is recorded at $13,000 on Elbert's books. In this case, the transaction is considered to be a monetary exchange, because the boot ($10,000) exceeds 25% of the total consideration ($10,000 plus $3,000 fair value of the old truck transferred to Wanda). Therefore, both parties to the exchange recognize all gains and losses on the transaction. The journal entry prepared by Elbert follows
The question asks for the Truck on Elberts books, which if I'm not mistaken, and Elbert is paying boot, then no gain on the trucks should be recognized. Why is this answer correct?
.