Mathew Corp Exchanged Similar Assets with Simone Company in a Transaction

question 58

Multiple Choice

Mathew Corp exchanged similar assets with Simone Company in a transaction with commercial substance. Mathew gave up equipment that had a net book value of $47,000 (fair value $49,000) and Simone exchanged equipment with a net book value of $36,000 (fair value $35,000) . What is the correct value at which Mathew should record the new equipment?

• A)$35,000
• B)$36,000
• C)$47,000
• D)$49,000

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Definitions:

Inventories

Assets held for sale in the ordinary course of business, in the process of production for such sale, or in the form of materials to be consumed in the production process.

External Party

An individual or organization that is separate from the entity being referred to and not directly involved in its operations or management.

Legal Entities

Organizations, companies, or individuals that have legal rights and obligations, allowing them to enter into contracts, sue, and be sued.

Consolidation Adjustment

Adjustments made to financial statements to account for the financial results of subsidiary companies as if they were part of the parent company.