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Nassau Co. owes Dominion Ltd. $115,000 on a note payable, plus $7,500 interest. Dominion agrees to accept land in full settlement. The land is recorded on the books of Nassau at $55,600 and is currently worth $85,000.​Required: Prepare the journal entry to record the debt settlement on the books of Nassau

Nassau Co. owes Dominion Ltd. $115,000 on a note payable, plus $7,500 interest. Dominion agrees to accept land in full settlement. The land is recorded on the books of Nassau at $55,600 and is currently worth $85,000.​Required: Prepare the journal entry to record the debt settlement on the books of Nassau

FINANCIAL ACCOUNTING
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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Nassau Co. owes Dominion Ltd. $115,000 on a note payable, plus $7,500 interest. Dominion agrees to accept land in full settlement. The land is recorded on the books of Nassau at $55,600 and is currently worth $85,000. ​ Required: Prepare the journal entry to record the debt settlement on the books of Nassau.
Expert Solution
Step 1: Introduction

Gain on disposal for land = current worth of land - Amount at which land is recorded  in books of Nassau.

As per IFRS/IAS 16 Property  plant and equipment, the land is given/transferred for note payabe, it should be recorded at fair value on date of transfer.




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