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Revenue Recognition Practice Test

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Q1

When the total consideration for a contract with multiple embedded obligations reflects a discount, the best way to assign that discount is to:

Equipment is bought by ABC Company for \$550,000 on January 1, Year 1. After 3 years, \$270,000 worth of depreciation has been recorded. At that time the asset has a fair market value of \$310,000 and it is exchanged for a similar asset with a fair market value of \$300,000. ABC also receives \$10,000 in the exchange. What amount of gain should ABC realize as a result of this transaction?

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