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What amount of gain should Sandhill recognize on exchange

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Question - Sandhill Co. traded machinery with a book value of $575000 and a fair value of $975000. It received in exchange from Bonita Industries a machine with a fair value of $877500 and cash of $97500. Bonita's machine has a book value of $926250. What amount of gain should Sandhill recognize on the exchange (assuming lack of commercial substance)?

A. -0-

B. $400000

C. $97500

D. $40000

Reference no: EM133078617

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