Pharaoh Company Equipment Exchange: Optimistic Analysis!

What is the gain recognized from the equipment exchange by Pharaoh Company?

Final answer:

The gain recognized from the exchange is $9,100.

Pharaoh Company exchanged equipment with a positive outcome: they recognized a gain of $9,100 from the exchange. This gain reflects a successful transaction and a positive outcome for the company.

The gain recognized from the exchange can be calculated by taking the fair value of the new equipment and subtracting the book value of the old equipment. In this case, the fair value of the new equipment is $48,500, and the book value of the old equipment (original cost minus accumulated depreciation) is $39,400. By subtracting $39,400 from $48,500, we get the gain recognized of $9,100.