[KuanW]

Hello,

Could someone help to explain the answer for transaction D? The question is from Ninja CPA Simulation. If I recall it correctly from Roger CPA, in the situation where no commercial substance, pick the lowest of 3 tests below.

Test 1: FV of asset given up + cash paid or – cash received
Test 2: FV of asset received
Test 3: BV of asset given up + cash paid or – cash received.

If this is correct, isn’t the the new asset’s value for transaction D supposed to be $500,000 rather than $670,000?

Here is the Ninja SIM:

Thanks