Please show me the correct way to solve this financial accounting problem with accurate methods. Hawthorne Industries and Wilshire Solutions exchange equipment in a like-kindexchange. Hawthorne Industries receives equipment with a fair market value of$35,000 and transfers equipment worth $25,000 (adjusted basis of $18,000) andcash of $6,000.What is Hawthorne Industries' realized and recognized gain?

Step 1: Definition of Realized and Recognized GainRealized Gain: The difference between the fair…

Answered: Hawthorne Industries and Wilshire…

SWFT Comprehensive Volume 2019

42nd Edition

ISBN:9780357233306

Author:Maloney

Publisher:Maloney

Chapter14: Property Transactions: Capital Gains And Losses, § 1231, And Recapture Provisions

Section: Chapter Questions

Problem 37CE

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Calaveras Tire exchanged equipment for two pickup trucks. The book value and fair value of the equipmentwere $20,000 (original cost of $65,000 less accumulated depreciation of $45,000) and $17,000, respectively.Calaveras also paid $8,000 in cash. At what amount will Calaveras value the pickup trucks? How much gain orloss will the company recognize on the exchange? Assume the exchange has commercial substance.
ABC Company exchanged equipment with DEF Corp. The following data were available: ABC's equipment had a carrying value of P3,500,000 and fair value of P1.875,000. DEF's equipment has a fair value of P1,000,000 and carrying value of P1,200,000. DEF paid P700,000 cash to ABC. If the exchange LACKS commercial substance, DEF would capitalize the new equipment at: 500,000 1,000,000 1,200,000 1,900,000
The Tuvok Company exchanged an old asset with a $125,700 tax basis and a $155,000 FMV for a new asset with a $147,250 FMV. Assume that this transaction is a like-kind exchange. Write all numbers with a comma, but no dollar sign (example: 130,000). a. For the exchange to occur (and be nontaxable), how much boot (if any) does Tuvok needs to receive? b. Calculate the gain realized: Calculate the gain recognized: c. Calculate the basis of the new asset for Tuvok: d. Assume the transaction is not a like-kind exchange and is a taxable transaction. Calculate the gain realized: Calculate the gain recognized:
What is the result of this exchange on these financial accounting question?
Calaveras Tire exchanged equipment for two pickup trucks. The book value and fair value of the equipment were $20,000 (original cost of $65,000 less accumulated depreciation of $45,000) and $17,000, respectively. To equalize fair values, Calaveras paid $8,000 in cash. At what amount will Calaveras value the pickup trucks? How much gain or loss will the company recognize on the exchange? Assume the exchange has commercial substance.
Firm M exchanged an old asset with a $11, 500 tax basis and a $29, 000 FMV for a new asset worth $ 22,500 and $6,500 cash. Required: If the exchange is nontaxable, compute Firm M's realized and recognized gain and tax basis in the new asset. How would your answers change if the new asset were worth only $ 11,000, and Firm M received $18,000 cash in the exchange?
Company A had a machine with a carrying amount of P450,000. Company B had a delivery vehicle with a carrying amount of P300,000. Companies A and B exchanged the machine and vehicle, and Company B paid an additional P90,000 cash as part of the exchange. Assume that the fair value of the delivery vehicle is P420,000. The exchange has commercial substance. How much gain or loss should be recorded by Company B?
Consider each of the following independent situations: a. GYT Co. exchanges a machine that cost $4,000 and has accumulated amortization of $2,560 for a similar machine. GYT also receives $25 in the exchange. The fair market value of the old asset is $750. The fair market value of the new asset is $725. There is no commercial substance to the transaction. b. FST Co. exchanges a machine that cost $4,000 and has accumulated amortization of $3,560 for a similar machine. FST also receives $25 in the exchange. The fair market value of the old asset is $750. The fair market value of the new asset is $725. There is no commercial substance to the transaction. c. LKC Co. pays $250 and exchanges a machine that cost $3,000 and has accumulated amortization of $1,900 for a similar machine. The fair market value of the old asset is undeterminable. The fair market value of the new asset is $690. The transaction has commercial substance. d. HRT Co. pays $250 and exchanges a…
Hoyle Company traded machinery with a book value of $680,000 and a fair value of $720,000. In exchange, it received a machine with a fair value of $800,000. Hoyle also paid cash of $80,000 in the exchange. What amount of gain or loss should Hoyle recognize on the exchange (assuming the exchange lacks commercial substance)? Hart Corporation owns machinery with a book value of $570,000. It is estimated that the machinery will generate future cash flows of $600,000. The machinery currently has a fair value of $420,000. How much asset impairment loss should Hart recognize?
Abbott exchanges land in a transaction that lacks commercial substance. The net book value of the land exchanged is $50,000. In exchange Abbott receives land with a fair value of $60,000 and $20,000 in cash. What is the gain that Abbott should recognize?
Grabrille Inc. and Lucy Company have an exchange with no commercial substance. The asset given up by Gabrille has a book value of P120,000 and a fair value of P135,000. The asset given up by Lucy has a book value of P220,000 and a fair value of P200,000. Cash of P65,000 is received by Lucy. What amount should Gabrille record for the asset received? a. 200,000 b. 110,000 c. 185,000 d. 135,000
Bryant Inc. and Rizzo Co. have an exchange that lacks commercial substance. The asset given up by Bryant Inc. has a book value of $36,500 and a fair value of $48,000. The asset given up by Rizzo Co. has a book value of $50,000 and a fair value of $40,000. Boot of $5,000 is received by Rizzo Co. What amount should Bryant Inc. record for the asset received?

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