Exchange - ompute the total gain or loss on the...

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ompute the total gain or loss on the transaction, which is equal to the difference between the fair market value of the asset given up and book value (cost minus accumulated depreciation) of the asset given up. Sometimes the fair market value of the asset received is more clearly evident and should be used to determine the fair market value of the asset given up. AFTER JUNE 15, 2005 the entire gain or loss is to be recognized. A typical journal entry is as follows: Debit Credit Cash (received or paid) xx or xx Accumulated depreciation (old asset) xx Asset (old asset cost) xx Loss (debit) or Gain (credit) xx or xx Asset (new asset basis) xx - - - - - - - - - - - - - PRIOR TO JUNE 15, 2005 losses were recognized in full but all of, none of or only a portion of the gain could have been recognized. Requirements for recognizing gains was as follows: 1. If the earnings process is considered complete (an exchange of dissimilar assets), the entire gain is recognized, or 2. If the earnings process is not considered complete (an exchange of similar assets) and:
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Exchange - ompute the total gain or loss on the...

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