Ellis Construction Company Recently Exchanged an Old Truck, Which Cost

question 18

Multiple Choice

Ellis Construction Company recently exchanged an old truck, which cost $108,000 and was one-third depreciated, and paid $70,000 cash for a similar truck having a current fair value of $130,000. The exchange lacked commercial substance. At what amount should the truck be recorded on the books of Ellis?

• A) $70,000
• B) $108,000
• C) $130,000
• D) $142,000

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Definitions:

Incompatible Motivations

Incompatible motivations describe a psychological state where an individual has two or more desires or needs that conflict with each other, making it difficult to satisfy all simultaneously.

Conflict

A struggle or clash between opposing forces or individuals, often involving a disagreement or competition.

Thwarted

Prevented from accomplishing a goal or fulfilling a desire; obstructed.

Pursuit

The act of following or chasing something with the goal of catching or achieving it.