Answer:
no loss or gain should be recognized by the Charm
Explanation:
Given:
Original cost of the truck = $10,000
Accumulated depreciation of the truck = $7,000
Thus,
the value of the truck after depreciation = $10,000 - $7,000 = $3,000
The amount paid with the exchange of the truck = $2,000
Therefore, the total considerable amount paid for the new truck
= value of the truck after depreciation + amount paid with the exchange
= $3,000 + $2,000
= $5,000
Also, the fair value of the truck = $5,000
Since, the amount total considered amount paid by the charm co. for the new truck is equal to the fair value of the truck.
Hence, there no loss or gain should be recognized by the Charm
