Two independent companies, Mitz Co and Pine Co, are in the home building business. Each owns a tract of land held for development, but each would prefer to build on the other's land. They agree to exchange their land. An appraiser was hired, and from her report and the companies records, the following information was obtained: Mintz's Land Cost and Book Value: $192,000 Fair value based upon appraisal: $240,000 Pine's Land Cost and Book Value: $120,000 Fair value based upon appraisal: $210,000 The exchange was made, and based on the difference in appraised fair values, Pine paid $30,000 to Mintz. The exchange lacked commercial substance. Use commas but do not use $ signs or cents. 1. For financial reporting purposes. Mintz should recognize a pre-tax gain on this exchange of
Two independent companies, Mitz Co and Pine Co, are in the home building business. Each owns a tract of land held for development, but each would prefer to build on the other's land. They agree to exchange their land. An appraiser was hired, and from her report and the companies records, the following information was obtained: Mintz's Land Cost and Book Value: $192,000 Fair value based upon appraisal: $240,000 Pine's Land Cost and Book Value: $120,000 Fair value based upon appraisal: $210,000 The exchange was made, and based on the difference in appraised fair values, Pine paid $30,000 to Mintz. The exchange lacked commercial substance. Use commas but do not use $ signs or cents. 1. For financial reporting purposes. Mintz should recognize a pre-tax gain on this exchange of
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
![Two independent companies, Mitz Co and Pine Co, are in the home building business. Each
owns a tract of land held for development, but each would prefer to build on the other's land.
They agree to exchange their land. An appraiser was hired, and from her report and the
companies records, the following information was obtained:
Mintz's Land
Cost and Book Value: $192,000
Fair value based upon appraisal: $240,000
Pine's Land
Cost and Book Value: $120,000
Fair value based upon appraisal: $210,000
The exchange was made, and based on the difference in appraised fair values, Pine paid
$30,000 to Mintz. The exchange lacked commercial substance.
Use commas but do not use $ signs or cents.
1. For financial reporting purposes. Mintz should recognize a pre-tax gain on this exchange of](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F5bd9fd3d-4f4d-4003-91c9-9c50e6822cb0%2F4ca1a926-fd9d-4867-a15c-1d0ca9b6f04e%2Fo9c29qm_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Two independent companies, Mitz Co and Pine Co, are in the home building business. Each
owns a tract of land held for development, but each would prefer to build on the other's land.
They agree to exchange their land. An appraiser was hired, and from her report and the
companies records, the following information was obtained:
Mintz's Land
Cost and Book Value: $192,000
Fair value based upon appraisal: $240,000
Pine's Land
Cost and Book Value: $120,000
Fair value based upon appraisal: $210,000
The exchange was made, and based on the difference in appraised fair values, Pine paid
$30,000 to Mintz. The exchange lacked commercial substance.
Use commas but do not use $ signs or cents.
1. For financial reporting purposes. Mintz should recognize a pre-tax gain on this exchange of
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