Equipment that originally cost 220000 with accumulated

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Equipment that originally cost $220,000 with accumulated depreciation of $100,000 to the date of exchange is traded (exchanged) for equipment with a fair value of $160,000. To even the exchange, $40,000 cash is received. The exchange lacks commercial substance.

1.The gain to be recognized from the exchange is

A)$16,000

B)$20,000

C)$60,000

D)$80,000

E)Some other amount than those shown above.

2.The new equipment should be recorded on the company's books at

A)$160,000.

B)$120,000.

C)$100,000.

D)$96,000.

E)Some other amount than those show above.

Reference no: EM13570238

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