In October 2011, Daryl Company Exchanged a Used Packaging Machine

question 42

Multiple Choice

In October 2011, Daryl Company exchanged a used packaging machine having a book value of $240,000 for a new machine and paid a cash difference of $30,000. The market value of the used packaging machine was determined to be $280,000. The exchange had commercial substance. In its income statement for the year ended December 31, 2011, how much gain should Daryl recognize on this exchange?

• A) $0
• B) $10,000
• C) $30,000
• D) $40,000

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Definitions:

Articulates

Relates to joints or articulation points in the skeleton where two or more bones come together, allowing for movement.

Olecranon Process

The bony prominence at the elbow, on the upper end of the ulna, that forms the point of the elbow.

Elbow

The elbow is a joint connecting the forearm to the upper arm, allowing for the bending and straightening of the arm.

Styloid Process

The styloid process is a slender, pointed projection of bone that extends from the temporal bone of the skull, where it serves as a point of attachment for muscles associated with the tongue and throat.