Problem:
Glen Inc. and Armstrong Co. have an exchange with no commercial substance. The asset given up by Glen Inc. has a book value of $36,000 and a fair value of $45,000. The asset given up by Armstrong Co. has a book value of $60,000 and a fair value of $57,000. Boot of $12,000 is received by Armstrong Co.
Required:
What amount should Armstrong Co. record for the asset received?
- $57,000
- $60,000
- $45,000
- $48,000
Note: Provide support for rationale.