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Property, Plant and Equipment Problem #2 A company exchanges two used printing presses with a total net book value of $24,000 ($40,000 cost less accumulated depreciation of $16,000) for a new printing press with a fair value of $24,000 and $3,000 in cash. The fair value of the two used printing presses is $27,000. The transaction is deemed to lack commercial substance.

Required:

1. Determine the amount of gain or loss that would be recognized under IFRS.

2. Prepare the related journal entry.

3. Explain the process the company used to determine the exchange of assets was lacking in commercial substance.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M92803292

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