Financial Accounting - Access
4th Edition
ISBN: 9781259958533
Author: SPICELAND
Publisher: MCG
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Question
Chapter 7, Problem 7.18E
1.
To determine
The fair value of the new land.
2.
To determine
To record: The exchange made.
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Kapono Farms exchanged an old tractor for a newer model. The old tractor had a book value of $12,000 (original cost of $28,000 less accumulated depreciation of $16,000) and a fair value of $9,000. Kapono paid $20,000 cash to complete the exchange. The exchange has commercial substance. Required: 1. What is the amount of gain or loss that Kapono would recognize on the exchange? What is the initial value of the new tractor? 2. Repeat requirement 1 assuming that the fair value of the old tractor is $14,000 instead of $9,000.
The Tinsley Company exchanged land that it had been holding for future plant expansion for a more suitable parcel located farther from residential areas. Tinsley carried the land at its original cost of $30,000. According to an independent appraisal, the land currently is worth $72,000. Tinsley paid $14,000 in cash to complete the transaction.Required:1. What is the fair value of the new parcel of land received by Tinsley?2. Prepare the journal entry to record the exchange assuming the exchange has commercial substance.3. Prepare the journal entry to record the exchange assuming the exchange lacks commercial substance.4. Prepare the journal entry to record the exchange except that Tinsley received $9,000 in the exchange, and the exchange lacks commercial substance.
The Tinsley Company exchanged land that it had been holding for future plant expansion for a more suitable parcel located farther from residential areas. Tinsley carried the land at its original cost of $30,000. According to an independent appraisal, the land currently is worth $72,000. Tinsley paid $14,000 in cash to complete the transaction. Required: 1. What is the fair value of the new parcel of land received by Tinsley? 2. Prepare the journal entry to record the exchange assuming the exchange has commercial substance. 3. Prepare the journal entry to record the exchange assuming the exchange lacks commercial substance.
Chapter 7 Solutions
Financial Accounting - Access
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