Question

Amble In exchanges a truck with a carrying value of 12,000 and a fair value of 20,000 for another truck and 5000 cash. The fair value of the truck received was 15,000. The exchange was not considered to have commercial substance. At what amount should Amble record the truck received in the exchange? a. $12,000

b. $15,000
c. $20,000
d. $5,000

Answer 1

In a non-commercial substance exchange, the fair value of the asset received in the exchange is used to determine its recorded amount. Amble received a truck with a fair value of $15,000 in exchange for their truck and $5,000 cash, so the recorded amount of the truck received would be $15,000. Therefore, the correct option is B.

Step-by-step explanation:

In a non-commercial substance exchange, the fair value of the asset received in the exchange is used to determine its recorded amount. In this case, Amble received a truck with a fair value of $15,000 in exchange for their truck and $5,000 cash. Therefore, the recorded amount of the truck received would be $15,000 (option b).