Question Details

What amount should Armstrong Co. record for the asset received 



Use the following information to answer questions 1 and 2.
Below is the information relative to an exchange of assets by Stanton Company. The exchange lacks commercial substance.

	Old Equipment	
	Book Value	Fair Value	Cash Paid
Case I	$75,000	$85,000	$15,000
Case II	$50,000	$45,000	$7,000

	
 
1.	Which of the following would be correct for Stanton to record in Case I?

	Record Equipment at:	Record a gain of (loss) of:
a.	$90,000	$0
b.	$100,000	$10,000
c.	$75,000	$(5,000)
d.	$90,000	$10,000

	
2.	Which of the following would be correct for Stanton to record in Case II?

	Record Equipment at:	Record a gain of (loss) of:
a.	$57,000	$5,000
b.	$50,000	$2,000
c.	$52,000	$(5,000)
d.	$50,000	$(2,000)

Use the following information for questions 3 and 4.
Glen Inc. and Armstrong Co. have an exchange with no commercial substance. The asset given up by Glen Inc. has a book value of $12,000 and a fair value of $15,000. The asset given up by Armstrong Co. has a book value of $20,000 and a fair value of $19,000. Boot of $4,000 is received by Armstrong Co.

3.	What amount should Glen Inc. record for the asset received?
a.	$15,000
b.	$16,000
c.	$19,000
d.	$20,000

	4.	What amount should Armstrong Co. record for the asset received ?
a.	$15,000
b.	$16,000
c.	$19,000
d.	$20,000

5.	Hardin Company received $40,000 in cash and a used computer with a fair value of $120,000 from Page Corporation for Hardin Company's existing computer having a fair value of $160,000 and an undepreciated cost of $150,000 recorded on its books. The transaction has no commercial substance. How much gain should Hardin recognize on this exchange, and at what amount should the acquired computer be recorded, respectively?
a.	$0 and $110,000
b.	$769 and $110,769
c.	$10,000 and $120,000
d.	$40,000 and $150,000




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