exhange of assets - EXAMPLE Gamble Company exchanges its...

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EXAMPLE Gamble Company exchanges its delivery trucks and $100,000 for similar type delivery trucks from Proctor Company. Relevant information on the date of exchange is as follows: GAMBLE COMPANY PROCTOR COMPANY Gamble trucks $ 400,000 Proctor trucks $ Accumulated depreciation 100,000 Accumulated depreciation Book Value $ 300,000 Book Value $ Fair market value of Gamble trucks $ 400,000 Fair market value of Proctor trucks $ Gamble Company Analysis: 1. Book value of Gamble trucks $ 300 2. Gain realized ($400,000-$300,000) $ 100 3. Defer gain (earnings process not complete) 4. Value assigned to Proctor trucks ($500,000-$100,000) 400 Gamble Company Entry to Record Exchange Trucks (Proctor) 400,000 Accumulated depreciation 100,000 Trucks (Gamble) 400 Cash 100 EXCHANGE OF SIMILAR NONMONETARY ASSETS (WITH AND WITHOUT BOOT)
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What is the nature of the assets being exchanged? What is the outcome of the exchange of similar assets? For the gain situation, was any monetary consideration received (and less than 25%)?* Recognized = Cash Received x Gain Realized Gain Cash Received + Fair Value of Other Assets Received
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