Cleopatra Company owns a tract of land that it purchased in 2017 for P2,000,000. The land is held as a future plant site and has a fair value of P3,000,000 on July 1, 2020. Caesar Company also owns a tract of land held as a future plant site. Caesar paid P3,600,000 for the land in 2018 and the land has a fair value of P3,800,000 on July 1, 2020. On this date, Cleopatra exchanged its land and paid P1,000,000 cash for the land owned by Caesar. The configuration of cash flows from land acquired is expected to be significantly different from the configuration of cash flows of the land exchanged. At what amount should Cleopatra record the land acquired in the exchange?

CONCEPTS IN FED.TAX.,2020-W/ACCESS
20th Edition
ISBN:9780357110362
Author:Murphy
Publisher:Murphy
Chapter10: Cost Recovery On Property: Depreciation, Depletion, And Amortization
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Cleopatra Company owns a tract of land that it purchased in 2017 for P2,000,000. The land is held as a future plant site and has a fair value of P3,000,000 on July 1, 2020. Caesar Company also owns a tract of land held as a future plant site. Caesar paid P3,600,000 for the land in 2018 and the land has a fair value of P3,800,000 on July 1, 2020. On this date, Cleopatra exchanged its land and paid P1,000,000 cash for the land owned by Caesar. The configuration of cash flows from land acquired is expected to be significantly different from the configuration of cash flows of the land exchanged. At what amount should Cleopatra record the land acquired in the exchange? 

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