Question

Arlington LLC exchanged land used in its business for some new land. Arlington originally purchased the land for $28,000. The new land had a fair market value of $35,000. Arlington also received $2,000 of office equipment in the transaction. What is Arlington's gain or loss recognized on the exchange?

Answer 1

Answer:

The correct answer here is $2000.

Explanation:

Given information -

Original value of asset - $28,000

Fair market value - $35,000

Equipment received in exchange of transaction - $2000

For taking out the Arlington's gain or loss  on the exchange we will select the lesser of the f\given two, which are fair market value of equipment which is $2000 and other one is gain recognized by - $35,000 + $2000 - $28,0000 = $9000, so the lesser of the two is $2000.