Misha Traded Computer Equipment Used in Her Business to a Computer

question 127

Essay

Misha traded computer equipment used in her business to a computer dealer for some new computer equipment. Misha originally purchased the computer equipment for $14,900, and it had an adjusted basis of $11,020 at the time of the exchange.The computer equipment was worth $13,000 at the time of the exchange. Misha also received a used copier worth $1,990 in the transaction. What is Misha's realized and recognized gain/loss on the exchange?

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Definitions:

Sales Allowance

A reduction in the selling price of goods, granted by the seller to the customer for partial refund due to minor defects or issues in the sold goods.

Discount Period

The time frame during which a payment can be made at a reduced rate, often related to invoice payments.

Credit Terms

The conditions under which credit will be extended to a customer, including the repayment period and any interest charges.

Merchandise

Goods that a company buys for resale to customers, encompassing a wide range of items sold by retailers.