Timmons Company Traded Machinery with a Book Value of $360,000

question 138

Multiple Choice

Timmons Company traded machinery with a book value of $360,000 and a fair value of $600,000. It received in exchange from Lewis Company a machine with a fair value of $540,000 and cash of $60,000. Lewis's machine has a book value of $570,000. What amount of gain should Timmons recognize on the exchange (assuming lack of commercial substance) ?

• A) $ -0-
• B) $24,000
• C) $60,000
• D) $240,000

---

Definitions:

Prostaglandins

A collection of lipid-based substances that possess a wide range of effects similar to hormones in animals.

Seminal Vesicles

(1) In mammals, glandular sacs that secrete a component of semen (seminal fluid). (2) In some invertebrates, structures that store sperm.

Spermatogenesis

The process by which spermatozoa are produced from male primordial germ cells by way of mitosis and meiosis, occurring in the testes.

Ejaculatory Duct

A short duct that passes through the prostate gland and opens into the urethra; receives semen from the vas deferens.