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

question 154

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 $10,000 and a fair value of $9,000. 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 lack commercial substance. Assuming that the book value method is used, Company X would record:

• A) no gain or loss on this transaction.
• B) a gain of $1,000 on this transaction.
• C) a loss of $1,000 on this transaction.
• D) a loss of $2,000 on this transaction.

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Definitions:

Project Charter

A document that formally authorizes a project, outlining its objectives, scope, and the roles of participants.

Alignment Process

The method of adjusting and coordinating a company's strategy, operations, and resources with its objectives, culture, and external environment.

Key Stakeholders

Individuals or groups with vested interests in the outcome of a project or process.

Goals

The targets or outcomes that an individual, team, or organization aims to achieve within a specified timeframe.