The Pizza Store Trades in a Delivery Car for a Newer

question 128

Multiple Choice

The Pizza Store trades in a delivery car for a newer model.The old delivery car has a cost of $9,000 and accumulated depreciation of $8,000.The Pizza Store pays cash of $10,000.The fair value of the newer car is $16,000.What is the gain or loss for the Pizza Store on the exchange of vehicles?

• A)$1,000 Loss
• B)$1,000 Gain
• C)$5,000 Gain
• D)$6,000 Gain

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Definitions:

Stated Value

An assigned value to no-par value stock by the company for accounting purposes, often used to meet state regulations.

Common Stock

A type of equity security that represents ownership in a corporation, entitling holders to a share of the company's profits and voting rights.

Par Value

The face value of a bond or stock as stated by the issuer.

Paid-in Capital

Paid-in capital represents the funds raised by a company through the sale of stock to shareholders, above the par value of the shares.