Use the Following Information for Questions 110 and 111

question 104

Multiple Choice

Use the following information for questions 110 and 111.
Equipment that cost $220,000 and has accumulated depreciation of $100,000 is exchanged for equipment with a fair value of $160,000 and $40,000 cash is received. The exchange lacked commercial substance.
-The gain to be recognized from the exchange is

• A) $16,000
• B) $20,000
• C) $60,000
• D) $80,000

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Definitions:

Different States

Variations across U.S. states or countries, particularly concerning laws, regulations, and cultural practices.

Diversity of Citizenship

A legal principle allowing the federal courts in the United States to hear cases where the parties are citizens of different states or a foreign country.

Federal Questions

Legal issues revolving around the interpretation of the U.S. Constitution, federal laws, or treaties, which federal courts are authorized to resolve.

Ethnicity

A social group that shares common cultural traits, such as language, religion, or ancestral origins.