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:

Feature Detector

Neurons in the brain that are responsible for detecting specific features of the environment, such as lines, edges, or movement.

Visual System

The part of the central nervous system which enables organisms to process visual detail, as well as enabling several photo response functions.

Neuron

A specialized cell transmitting nerve impulses; a nerve cell, which is the basic building block of the nervous system.

Feature Detector

A type of neuron in the brain that responds to specific attributes of a stimulus, such as angles or edges in vision.