Brown Company contracts with Sebastian Company to exchange refrigerated trucks. Brown Company will trade three SMC trucks for four DROF trucks owned by Sebastian Company. The trucks are approximately the same age and have the same remaining useful lives. The fair value of the SMC trucks is $51,000 with a book value of $38,000 (cost $65,000 less $27,000 accumulated depreciation). The DROF trucks have a fair value of $66,000 and Brown Company gives $15,000 in cash (paid) in addition to the SMC trucks. Assuming the exchange lacks commercial substance, what would be the value of the new DROF trucks? O $13,000 O $53,000 O $81,000 O $66,000
Brown Company contracts with Sebastian Company to exchange refrigerated trucks. Brown Company will trade three SMC trucks for four DROF trucks owned by Sebastian Company. The trucks are approximately the same age and have the same remaining useful lives. The fair value of the SMC trucks is $51,000 with a book value of $38,000 (cost $65,000 less $27,000 accumulated depreciation). The DROF trucks have a fair value of $66,000 and Brown Company gives $15,000 in cash (paid) in addition to the SMC trucks. Assuming the exchange lacks commercial substance, what would be the value of the new DROF trucks? O $13,000 O $53,000 O $81,000 O $66,000
Chapter9: Capital Budgeting And Cash Flow Analysis
Section: Chapter Questions
Problem 14P
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Question
![Brown Company contracts with Sebastian Company to exchange refrigerated trucks. Brown Company will trade three SMC trucks for four DROF
trucks owned by Sebastian Company. The trucks are approximately the same age and have the same remaining useful lives. The fair value of the SMC
trucks is $51,000 with a book value of $38,000 (cost $65,000 less $27,000 accumulated depreciation). The DROF trucks have a fair value of $66,000
and Brown Company gives $15,000 in cash (paid) in addition to the SMC trucks. Assuming the exchange lacks commercial substance, what would be
the value of the new DROF trucks?
O $13,000
O $53,000
O $81,000
O $66,000
Question 15
Brown Company contracts with Sebastian Company to exchange refrigerated trucks. Brown Company will trade three SMC trucks for four DROF
trucks owned by Sebastian Company. The trucks are approximately the same age and have the same remaining useful lives. The fair value of the
1.000.000 for $45.000 less $27.000 accumulated depreciation). The DROF trucks have a fair value of $66](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fe890579c-94a4-423d-91dd-4fb21feea66a%2F2c6eec81-20c8-4219-b0ef-a824b7af595d%2Fx41delk_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Brown Company contracts with Sebastian Company to exchange refrigerated trucks. Brown Company will trade three SMC trucks for four DROF
trucks owned by Sebastian Company. The trucks are approximately the same age and have the same remaining useful lives. The fair value of the SMC
trucks is $51,000 with a book value of $38,000 (cost $65,000 less $27,000 accumulated depreciation). The DROF trucks have a fair value of $66,000
and Brown Company gives $15,000 in cash (paid) in addition to the SMC trucks. Assuming the exchange lacks commercial substance, what would be
the value of the new DROF trucks?
O $13,000
O $53,000
O $81,000
O $66,000
Question 15
Brown Company contracts with Sebastian Company to exchange refrigerated trucks. Brown Company will trade three SMC trucks for four DROF
trucks owned by Sebastian Company. The trucks are approximately the same age and have the same remaining useful lives. The fair value of the
1.000.000 for $45.000 less $27.000 accumulated depreciation). The DROF trucks have a fair value of $66
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