[kxmcpa]

It is these types of questions that I always feared. Can someone please explain the answer to me?

Becker CPA-00718:

Amble, Inc. exchanged a truck with a carrying amount of $12,000 and a fair value of $20,000 for a truck and $4,000 cash. The fair value of the truck received was $16,000. At what amount should Amble record the truck received in the exchange?

Answer: $9,600

Thank you , America Friends!

dream come true!(????)

[evancole]

Btw, you posted this same question 6 times, it takes a few seconds to get posted, so be try to be patient next time. But more importantly, the way I would solve it is a journal entry:

DR: Cash 4,000 (Cash received)

DR: New truck: 9,600 (plug)

CR: Gain: 1,600 (gain recognized: 8,000 realized * (4,000/20,000))

CR: Old truck: 12,000 (Carrying amount)

So basically the new truck should be recorded as the fair value less the unrecognized gain ( 16,000 – 6,400 = 9,600). Let me know if that makes sense…

[Author]

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