CFA Practice Question

There are 520 practice questions for this study session.

CFA Practice Question

Interstate Transportation Company exchanged a number of used trucks plus cash for vacant land that might be used for a future plant site. The trucks have a combined book value of $42,000 (cost $64,000, less $22,000 accumulated depreciation) and estimated market value of $49,000. Interstate must pay $17,000 cash and the trucks for the land. How much should Interstate record as the land's value?
A. $66,000
B. $81,000 book value and $22,000 accumulated depreciation
C. $59,000
Explanation: $49,000 + $17,000 = $66,000

The cost of a non-monetary asset acquired in exchange for a dissimilar non-monetary asset is usually recorded at the fair market value of the asset given up, and a gain or loss is recognized (in this case, a gain on the disposal of the trucks: $49,000 - $42,000 = $7,000).

User Contributed Comments 1

User Comment
schweitzdm Dang. went with lower of cost or market regarding the trucks.
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