Asset exchange with commercial substanceln 2015, Malawi Inc. exchanged equipment for two delivery trucks. The equipment had beenpurchased for $95,000 ten years ago and has since been fully depreciated. While the equipmentwas recently appraised at $22,000, a reliable valuation for the trucks was not available. Thistransaction has commercial substance.InstructionsPrepare the journal entry to record the exchange.

Asset exchange with commercial substanceln 2015, Malawi Inc. exchanged equipment for two delivery trucks. The equipment had beenpurchased for $95,000 ten years ago and has since been fully depreciated. While the equipmentwas recently appraised at $22,000, a reliable valuation for the trucks was not available. Thistransaction has commercial substance.InstructionsPrepare the journal entry to record the exchange.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Required information [The following information applies to the questions displayed below.] Case A. Kapono Farms exchanged an old tractor for a newer model. The old tractor had a book value of $15,000 (original cost of $34,000 less accumulated depreciation of $19,000) and a fair value of $9,600. Kapono paid $26,000 cash to complete the exchange. The exchange has commercial substance. Case B. Kapono Farms exchanged 100 acres of farmland for similar land. The farmland given had a book value of $530,000 and a fair value of $760,000. Kapono paid $56,000 cash to complete the exchange. The exchange has commercial substance. 1. What is the amount of gain or loss that Kapono would recognize on the exchange of the land? 2. Assume the fair value of the farmland given is $424,000 instead of $760,000. What is the amount of gain or loss that Kapono would recognize on the exchange? What is the initial value of the new land? 3. Assume the same facts as Requirement 1 and that the exchange lacked…
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Dd59.