B is corrent because the fair value of the delivery truck, $90,000, less the book value of the truck, $60,000 on the date of disposition, equals the gain on disposition of the delivery truck of $30,000. The requirement is to determine the amount of gain that should be recognized. If a nonmonetary transaction has commercial substance, a gain or loss should be recognized on the exchanged asset. The delivery truck had an original cost of $140,000 and accumulated depreciation of $80,000. The book value of the delivery truck is calculated as original cost less accumulated depreciation, or $60,000 ($140,000 - $80,000).
A is incorrect. The fair value of the delivery truck, $90,000, less the book value of the truck, $60,000 on the date of disposition, equals the gain on disposition of the delivery truck of $30,000. The requirement is to determine the amount of gain that should be recognized. If a nonmonetary transaction has commercial substance, a gain or loss should be recognized on the exchanged asset. The delivery truck had an original cost of $140,000 and accumulated depreciation of $80,000. The book value of the delivery truck is calculated as original cost less accumulated depreciation, or $60,000 ($140,000 - $80,000).
C is incorrect. The fair value of the delivery truck, $90,000, less the book value of the truck, $60,000 on the date of disposition, equals the gain on disposition of the delivery truck of $30,000. The requirement is to determine the amount of gain that should be recognized. If a nonmonetary transaction has commercial substance, a gain or loss should be recognized on the exchanged asset. The delivery truck had an original cost of $140,000 and accumulated depreciation of $80,000. The book value of the delivery truck is calculated as original cost less accumulated depreciation, or $60,000 ($140,000 - $80,000).
D is incorrect. The fair value of the delivery truck, $90,000, less the book value of the truck, $60,000 on the date of disposition, equals the gain on disposition of the delivery truck of $30,000. The requirement is to determine the amount of gain that should be recognized. If a nonmonetary transaction has commercial substance, a gain or loss should be recognized on the exchanged asset. The delivery truck had an original cost of $140,000 and accumulated depreciation of $80,000. The book value of the delivery truck is calculated as original cost less accumulated depreciation, or $60,000 ($140,000 - $80,000).
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