Sensitive Company paid P500,000 and gave a plot ofundeveloped land with a carrying amount of P3,200,000 anda fair value of P4,500,000 to another entity in exchange for aplot of undeveloped land with a fair value of P5,000,000. Theland was carried on the other entity's books at P3,500,000.The configuration of cash flows from the land acquired isexpected to be significantly different from theconfiguration of cash flows of the land exchanged. Whatamount should be recognized as carrying amount of landreceived in exchange by Sensitive Company?

Gain on sale of the asset shall be recognized by taking the difference between the sale value of the…

Answered: ected to be significantly different…

ected to be significantly different from th iguration of cash flows of the land exchanged. Wha unt should be recognized as carrying amount of lan ived in exchange by Sensitive Company?

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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Question

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Sensitive Company paid P500,000 and gave a plot of
undeveloped land with a carrying amount of P3,200,000 and
a fair value of P4,500,000 to another entity in exchange for a
plot of undeveloped land with a fair value of P5,000,000. The
land was carried on the other entity's books at P3,500,000.
The configuration of cash flows from the land acquired is
expected to be significantly different from the
configuration of cash flows of the land exchanged. What
amount should be recognized as carrying amount of land
received in exchange by Sensitive Company?

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