1. Why for the question #92 you use Book Value to compute cost of the equipment as

BV of 450000

+ Cash given up of 90000

= 540000,

BUT for the questions #93 you use Fair Value to compute cost of the equipment as

FV of 270000

+ Cash given up of 42000 =312000?

2. Why for the #92 you dont record any gain or loss BUT you record the loss for #93? If in both cases the exchange LACKS Commercial Substance, so the instructions are the same for both cases then why computation are different?

Use the following information to answer questions 92 & 93. Below is the information relative to an exchange of assets by Stanton Company. The exchange lacks commercial substance. Old Equipment Book Value $450,000 $300,000 Fair Value $510,000 $270,000 Cash Paid $90,000 $42,000 CaseI Case lI 92. Which of the following would be correct for Stanton to record in Case 1? Record Equipment at: Record a gain of (loss) of: a. b. C. d. $540,000 $600,000 $450,000 $540,000 $0 $60,000 $(30,000) $60,000 Ans: A. 93. Which of the following would be correct for Stanton to record in Case l1? a. b. C. d. $342,000 $300,000 $312,000 $300,000 $30,000 $12,000 $(30,000) $(12,000) Ans: C