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ABC Company exchanged equipment with DEF Corp. The following data were available: ABC's equipment had a carrying value of P3,500,000 and fair value of P1.875,000.  DEF's equipment has a fair value of P1,000,000 and carrying value of P1,200,000.  DEF paid P700,000 cash to ABC.   If the exchange has commercial substance, ABC would capitalize the new equipment at:   300,000 1,175,000 2,575,000 3,500,000

ABC Company exchanged equipment with DEF Corp. The following data were available: ABC's equipment had a carrying value of P3,500,000 and fair value of P1.875,000.  DEF's equipment has a fair value of P1,000,000 and carrying value of P1,200,000.  DEF paid P700,000 cash to ABC.   If the exchange has commercial substance, ABC would capitalize the new equipment at:   300,000 1,175,000 2,575,000 3,500,000

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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ABC Company exchanged equipment with DEF Corp. The following data were available:

ABC's equipment had a carrying value of P3,500,000 and fair value of P1.875,000. 

DEF's equipment has a fair value of P1,000,000 and carrying value of P1,200,000. 

DEF paid P700,000 cash to ABC.

 

If the exchange has commercial substance, ABC would capitalize the new equipment at:

 

300,000

1,175,000

2,575,000

3,500,000

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