Calculate the amount of a gain or loss from the exchange

Reference no: EM133608881

Case: Lambert Inc. had a machine that cost $850,000 on March 20, 2022. This old machine had an estimated life of ten years and a salvage value of $50,000. On December 23, 2026, the old machine is exchanged for a new machine with a fair value of $540,000. The exchange lacked commercial substance. Lambert also received $60,000 cash. Assume that the last fiscal period ended on December 31, 2025, and that straight-line depreciation is used.

Required: (a) Calculate the amount of a gain or loss from the exchange for Lambert. (b) Prepare all entries for December 23, 2026 for Lambert.

Reference no: EM133608881

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