Business, 30.11.2019 05:31 asianpatriot7375

Xcompany and y company, operating on opposite sides of the country, manufacture equipment that is virtually identical except for a higher grade of metal used by x company. as a result, the costs and fair values of one piece of equipment to x and y are: cost fair market value x company $ 75,000 $ 105,000 y company $ 65,000 $ 91,000 x company received an order from a customer in y’s state and y received an order from a customer in x’s state. in a transaction that lacks commercial substance, to avoid the cost and effort of shipping the equipment across the country, x and y exchanged equipment and, essentially, x shipped to y’s customer and vice versa. due to the difference in metals, however, y paid x $14,000 in cash.
how much profit will x company recognize as a result of the exchange?
$0
$4,000
$14,000
$30,000

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