Ibarra Carpet Traded Cleaning Equipment with a Cost of $27,000

question 45

Multiple Choice

Ibarra Carpet traded cleaning equipment with a cost of $27,000 and accumulated depreciation of $5,250 for new equipment with a fair market value of $14,500.Assuming the exchange lacks commercial substance,Ibarra should record the new equipment at

• A) $14,750.
• B) $13,750.
• C) $14,500.
• D) $7,500.

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Definitions:

Semi-Strong Form Efficiency

This refers to a theory suggesting that all public information is already accounted for in stock prices, and that it's impossible to achieve higher returns using this information alone.

Market Efficiency

a condition in which asset prices fully reflect all available information.

Well-Organized Markets

Refers to financial markets that are structured efficiently, facilitating the seamless exchange of securities.

Dollar Return

The total gain or loss on an investment expressed in monetary terms, considering both capital gains and dividends or interest.