Equipment Was Acquired for $256,000 and Has Accumulated Depreciation of $190,000.The

question 139

Multiple Choice

Equipment was acquired for $256,000 and has accumulated depreciation of $190,000.The business exchanges this equipment for new equipment.The new equipment has a market value of $209,000 and the business pays $157,000 cash.Assume the exchange has commercial substance.The exchange results in ________.

• A) loss $14,000
• B) gain $14,000
• C) gain $143,000
• D) loss $143,000

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Definitions:

Unrealized Loss Account

An account that reflects losses which have occurred on paper due to changes in market values but have not been actually realized through a transaction.

Short-Term Stock Investments

Investments in stock intended to be held for a short duration, typically less than one year, for earning a quick profit.

Fair Value

The estimated market value of an asset or liability, based on current prices in an active market.

Stock Market

A public market for buying and selling equity securities and derivatives of companies, facilitating capital exchange between investors.