Company X Has a Machine with a Book Value of $10,000

question 123

Multiple Choice

Company X has a machine with a book value of $10,000 and a fair value of $15,000. Company Y has a machine with a book value of $16,000 and a fair value of $14,000. Company X and Y exchange machines. In addition, Company X gives $1,000 to Company Y as a result of the exchange. The transaction is deemed to have commercial substance and the fair value measurement of the assets are equally reliable. Company X would record the machine acquired from Company Y at:

• A) $10,000.
• B) $14,000.
• C) $15,000.
• D) $16,000.

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Definitions:

Original Tenor

The initial agreed-upon duration or terms of a financial instrument or loan.

Conditional Indorsement

A stipulation placed on a negotiable instrument (like a check) that modifies the way the instrument is to be redeemed.

Blank Indorsement

A signature by the holder on the back of a negotiable instrument, such as a check, without specifying a particular endorsee, allowing any holder to claim the funds.

Special Indorsement

A legal endorsement on a negotiable financial instrument that specifies the person to whom the instrument is payable.