Colt Football Co. had a player contract with Watts that is recorded in its books at $4,800,000 on July 1, 2012. Day Football Co. had a player contract with Kurtz that is recorded in its books at $6,000,000 on July 1, 2012. On this date, Colt traded Watts to Day for Kurtz and paid a cash difference of $600,000. The fair value of the Kurtz contract was $7,200,000 on the exchange date. The exchange had no commercial substance. After the exchange, the Kurtz contract should be recorded in Colt's books at A) $7,200,000. B) $6,000,000. C) $6,600,000. D) $5,400,000.
Colt Football Co. had a player contract with Watts that is recorded in its books at $4,800,000 on July 1, 2012. Day Football Co. had a player contract with Kurtz that is recorded in its books at $6,000,000 on July 1, 2012. On this date, Colt traded Watts to Day for Kurtz and paid a cash difference of $600,000. The fair value of the Kurtz contract was $7,200,000 on the exchange date. The exchange had no commercial substance. After the exchange, the Kurtz contract should be recorded in Colt's books at A) $7,200,000. B) $6,000,000. C) $6,600,000. D) $5,400,000.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![Colt Football Co. had a player contract with Watts that is recorded
in its books at $4,800,000 on July 1, 2012. Day Football Co. had a
player contract with Kurtz that is recorded in its books at
$6,000,000 on July 1, 2012. On this date, Colt traded Watts to Day
for Kurtz and paid a cash difference of $600,000. The fair value of
the Kurtz contract was $7,200,000 on the exchange date. The
exchange had no commercial substance. After the exchange, the
Kurtz contract should be recorded in Colt's books at
A) $7,200,000.
B) $6,000,000.
C) $6,600,000.
D) $5,400,000.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fe033ff83-d2a8-4e30-92bf-086c70c63993%2Fa310b606-5e2b-45f4-ac4d-d8625ddb6eb5%2F3rt31ig_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Colt Football Co. had a player contract with Watts that is recorded
in its books at $4,800,000 on July 1, 2012. Day Football Co. had a
player contract with Kurtz that is recorded in its books at
$6,000,000 on July 1, 2012. On this date, Colt traded Watts to Day
for Kurtz and paid a cash difference of $600,000. The fair value of
the Kurtz contract was $7,200,000 on the exchange date. The
exchange had no commercial substance. After the exchange, the
Kurtz contract should be recorded in Colt's books at
A) $7,200,000.
B) $6,000,000.
C) $6,600,000.
D) $5,400,000.
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