Answer:
Loss on exchange is -$7,800
initial value of tractor is $42,200
Gain on exchange is $8000
Initial value of tractor is $58,000
Explanation:
The amount of gain or loss recognizable on the exchange is the difference between the fair value of the old asset and its book value
Loss on the asset=$10,200-$18,000=-$7,800
Initial value of the new tractor=fair value of the old tractor+cash payment
Initial value of the new tractor=$32,000+$10,200=$42,200
If fair value were $26,000
gain on the exchage=$26,000-$18,000=$8,000
Initial value of the new tractor=$32,000+$26,000=$58,000
