Question: In Emmes 2010 income statement, what amount should be reported as gain (loss) on sale of machinery? a. $(30,000) loss. b. $ 30,000 gain. c.

In Emme’s 2010 income statement, what amount should be reported as gain (loss) on sale of machinery?

a. $(30,000) loss.

b. $ 30,000 gain.

c. $120,000 gain.

d. $270,000 gain.

Items are based on the following:

On January 2, 2010, Emme Co. sold equipment with a carrying amount of $480,000 in exchange for a $600,000 noninterest-bearing note due January 2, 2013. There was no established exchange price for the equipment. The prevailing rate of interest for a note of this type at January 2, 2010, was 10%. The present value of $1 at 10% for three periods is 0.75.

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