Alamos Co. exchanged equipment and $18,000 cash for similar equipment.
The book value and the fair value of the old equipment were $82,000 and
$90,000, respectively.
Assuming that the exchange has commercial substance, Alamos would record a gain/(loss) of:
Assuming that the exchange has commercial substance, Alamos would record a gain/(loss) of:
| $26,000. | |
 | $8,000. |
| $(8,000). | |
| $0. |
| Equipment-new (FV of old + $18,000) | 108,000 | |
| Cash | 18,000 | |
| Equipment-old (book value) | 82,000 | |
| Gain ($90,000 – 82,000) | 8,000 |
