Bogus Co. exchanged Building 42 which has an appraised value of $4,800,000, a cost of $7,590,000, and accumulated depreciation of $3,600,000 for Building X belonging to Good Co. Building X has an appraised value of $4,512,000, a cost of $9,030,000, and accumulated depreciation of $4,752,000. The correct amount of cash was also paid. Assume depreciation has already been updated. What gain or loss did Bogus recognize on the exchange, assuming no commercial substance?
| 48,600 loss
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| 24,000 gain | ||||||||||||||
| 0 gain/loss | ||||||||||||||
| None of the above
Question 15 Bogus Co. exchanged Building 42 which has an appraised value of $4,800,000, a cost of $7,590,000, and accumulated depreciation of $3,600,000 for Building X belonging to Good Co. Building X has an appraised value of $4,512,000, a cost of $9,030,000, and accumulated depreciation of $4,752,000. The correct amount of cash was also paid. Assume depreciation has already been updated. How much gain or loss did Good record, assuming no commercial substance?
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Answer:
14
Gain recognized ; $ 48,600
Working notes for the above answer is as under
| Boguse company | |
| Calculation of profit / Loss | Amount in $ |
| Cost | 7,590,000 |
| Accumulated depreciation | 3600000 |
| Book value | 3990000 |
| Fair value | 4800000 |
| Gain | 810000 |
| Gain recognized (288/4,800 × $810,000 | 48,600 |
Question 15
Gain recognized ; $ 48,600
Working notes for the above answer is as under
| Boguse company | |
| Calculation of profit / Loss | Amount in $ |
| Cost | 7,590,000 |
| Accumulated depreciation | 3600000 |
| Book value | 3990000 |
| Fair value | 4800000 |
| Gain | 810000 |
| Gain recognized (288/4,800 × $810,000 | 48,600 |
