Use the Following Information for Questions

question 60

Multiple Choice

Use the following information for questions.
A machine cost $120,000, has annual depreciation of $20,000, and has accumulated depreciation of $90,000 on December 31, 2010.On April 1, 2011, when the machine has a fair value of $27,500, it is exchanged for a machine with a fair value of $135,000 and the proper amount of cash is paid.The exchange has commercial substance.
-The gain to be recorded on the exchange is

• A)$0.
• B)$2,500.
• C)$5,000.
• D)$15,000.

---

Definitions:

Unadjusted Trial Balance

A preliminary list of all accounts and their balances in the general ledger before any adjusting entries are made to prepare financial statements.

Financial Statements

The formal records of the financial activities and position of a business, individual, or other entity, including the balance sheet, income statement, and cash flow statement.