Part A: On November 1, Ellery Corp. purchased land by transferring $50,000 cash and a building to the other company. The building given up had an original cost of $2,000,000, a book value of $400,000, and a fair market value of $900,000. Prepare the journal entry Ellery should make to record the exchange of the building and cash for the land, assuming the exchange has commercial substance. Part B: If the above exchange were deemed to have non-
Part A: On November 1, Ellery Corp. purchased land by transferring $50,000 cash and a building to the other company. The building given up had an original cost of $2,000,000, a book value of $400,000, and a fair market value of $900,000. Prepare the journal entry Ellery should make to record the exchange of the building and cash for the land, assuming the exchange has commercial substance. Part B: If the above exchange were deemed to have non-
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Part A: On November 1, Ellery Corp. purchased land by transferring $50,000 cash and a building to the other company. The building given up had an original cost of $2,000,000, a book value of $400,000, and a fair market value of $900,000.
Prepare the
Part B: If the above exchange were deemed to have non-commercial substance, by what amount should the “Land” account be debited?
| Date | Account | Debit | Credit |
| November 1, 2022 | |||
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