**Transaction Details:**Salad Express exchanged a parcel of land it had reserved for future plant expansion for a more strategically located parcel along distribution routes. The original land's cost, as reported on the balance sheet, was $77,000. However, according to an independent appraisal, its current value is $146,000. To complete the exchange transaction, Salad Express additionally paid $22,500 in cash.**Required:**1. **Determine the Fair Value of the New Parcel of Land Received by Salad Express.** - **Calculation Entry Box:** - **Fair value of the new land:** [Provide the solution here]**Explanation for Calculating Fair Value:**To determine the fair value of the new land acquired, sum the current appraised value of the old land ($146,000) with the cash paid ($22,500). This gives the total consideration paid to acquire the new land parcel.

Land is a non-current asset that is held and owned by an entity for the purpose of running its…

Answered: Salad Express exchanged land it had…

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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China Inn and Midwest Chicken exchanged assets. Midwest Chicken received restaurant equipment and gave delivery equipment. The fair value and book value of the delivery equipment given were $25,000 and $28,000 (original cost of $33,000 less accumulated depreciation of $5,000), respectively. To equalize market values of the exchanged assets, Midwest Chicken received $8,000 in cash from China Inn. Record the gain or loss for Midwest Chicken on the exchange of the equipment. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.)
(CO F) XYZ Corporation purchased land and an office building for $2,800,000. The real estate contract did not specify the amounts to allocate to the land and to the building. An appraisal determined the fair market value (FMV) of the land to be $1.000,000 and the fair market value (FMV) of the building to be $3.000,000, a) Please calculate the basis of the land. Show your work. b) Please calculate the basis of the building. Show your work.
China Inn and Midwest Chicken exchanged assets. China Inn received delivery equipment and gave restaurant equipment. The fair value and book value of the restaurant equipment were $21,500 and $11,800 (original cost of $44,000 less accumulated depreciation of $32,200), respectively. To equalize market values of the exchanged assets, China Inn paid $8,900 in cash to Midwest Chicken. Record the gain or loss for China Inn on the exchange of the equipment. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.)
Case A. Kapono Farms exchanged an old tractor for a newer model. The old tractor had a book value of $16,500 (original cost of $37,000 less accumulated depreciation of $20,500) and a fair value of $9,900. Kapono paid $29,000 cash to complete the exchange. The exchange has commercial substance. Case B. Kapono Farms exchanged 100 acres of farmland for similar land. The farmland given had a book value of $545,000 and a fair value of $790,000. Kapono paid $59,000 cash to complete the exchange. The exchange has commercial substance. Required: What is the amount of gain or loss that Kapono would recognize on the exchange? What is the initial value of the new land? Assume the fair value of the farmland given is $436,000 instead of $790,000. What is the amount of gain or loss that Kapono would recognize on the exchange? What is the initial value of the new land? Assume the same facts as Requirement 1 and that the exchange lacked commercial substance. What is the amount of gain or loss that…
Red River Bakery purchases land, building, and equipment for a single purchase price of $260,000. However, the estimated fair values of the land, building, and equipment are $126,000, $198,000, and $36,000, respectively, for a total estimated fair value of $360,000. Required: Determine the amounts Red River should record in the separate accounts for the land, the building, and the equipment.
Case B. Kapono Farms exchanged 100 acres of farmland for similar land. The farmland given had a book value of $520,000 and a fair value of $740,000. Kapono paid $54,000 cash to complete the exchange. The exchange has commercial substance. Required: What is the amount of gain or loss that Kapono would recognize on the exchange? What is the initial value of the new land? Assume the fair value of the farmland given is $416,000 instead of $740,000. What is the amount of gain or loss that Kapono would recognize on the exchange? What is the initial value of the new land? Assume the same facts as Requirement 1 and that the exchange lacked commercial substance. What is the amount of gain or loss that Kapono would recognize on the exchange? What is the initial value of the new land? Assume the same facts as Requirement 2 and that the exchange lacked commercial substance. Assume the fair value of the farmland given is $416,000 instead of $740,000. What is the amount of gain or loss that…
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The Chicago Corporation acquired a piece of land in a business combination transaction from the Milwaukee Corporation, an unrelated company. The land originally cost $750,000 when purchased by Milwaukee Corporation. The fair value of the land has subsequently been considered by Chicago Corporation for two different purposes, one as a site for a storage facility and the other as site for a grocery store. If the land is used to develop as a storage facility the fair value was estimated to be $1,000,000 and alternatively, the land for the grocery store is estimated to be $1,250,000. The land is currently zoned for both purposes. Chicago Corporation intends to use the property to develop as a storage facility. Which value should the Chicago Corporation use in its financial statements for the land? (do not use dollar signs, commas or decimals in your answer) What fair value principle did you use to determine the fair value?
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SEASH, Inc. acquired an office building, land, and equipment in a single basket purchase. The fair values were $2,400,000, $1,200,000, and $400,000 for the building, land, and equipment, respectively. The company recorded the building for $2,160,000. What was the total purchase cost for all three assets? Select one: a. $3,400,000 b. $3,600,000 c. $3,200,000 d. $3,800,000 e. $4,000,000

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