Sle co. owned a copy machine that cost $5,000 and had accumulated depreciation of $2,000. isle exchanged the copy machine for a computer that cost $4,000. isle's future cash flows are not expected to change significantly as a result of the exchange. what amount of gain or loss should isle report and at what amount should it record the asset?

In the income statement, there is no loss or gain and assets worth $3,000 is recorded in the balance sheet.

Explanation:

Exchange of non- monetary assets which is not expected to change the cash flows of the entity significantly lacks the commercial substance.

The accounting for exchange is grounded on the carrying amount of the assets given up, unless the boot is received so there is no gain recognized.

The asset named computer is recognized at the amount of carrying value of the copy machine amounts to $3,000.

Working Note:

Asset value = Cost of machine - Accumulated Depreciation

= $5,000 - $2,000

= $3,000

cognitive overload: having a lot on your mind impairs decision-making and tends to result in the simplest, but not necessarily best, option being selected.

empathy gaps: overlooking how you might feel in a different situation can result in unnecessary purchases, such as overbuying when shopping for food on an empty stomach.

optimism and overconfidence: wearing rose-tinted glasses and having unrealistic expectations about the future can affect money management and leave you unprepared for a change in circumstance.

instant gratification: seeking instant gratification drives impulsive spending and can undermine long-term planning and savings.

harmful habits: automatic or mindless behaviour can amplify a poor financial decision as it becomes a recurring event.

social norms: we are heavily influenced by the actions of others; while this can be in certain circumstances, it also contributes to the pressure to keep up with the joneses through conspicuous consumption.