[The following information applies to the questions displayed below.] Case A. Kapono Farms exchanged an old tractor for a newer model. The old tractor had a book value of $16,000 (original cost of $36,000 less accumulated depreciation of $20,000) and a fair yalue of $9,800. Kapono paid $28,000 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 $540,000 and a fair value of $780,000. Kapono paid $58,000 cash to complete the exchange. The exchange has commercial substance. Required: 1. What is the amount of gain or loss that Kapono would recognize on the exchange? What is the initial value of the new tractor? 2. Assume the fair value of the old tractor is $22,000 instead of $9,800. What is the amount of gain or loss that Kapono would recognize on the exchange? What is the initial value of the new tractor?

[The following information applies to the questions displayed below.] Case A. Kapono Farms exchanged an old tractor for a newer model. The old tractor had a book value of $16,000 (original cost of $36,000 less accumulated depreciation of $20,000) and a fair yalue of $9,800. Kapono paid $28,000 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 $540,000 and a fair value of $780,000. Kapono paid $58,000 cash to complete the exchange. The exchange has commercial substance. Required: 1. What is the amount of gain or loss that Kapono would recognize on the exchange? What is the initial value of the new tractor? 2. Assume the fair value of the old tractor is $22,000 instead of $9,800. What is the amount of gain or loss that Kapono would recognize on the exchange? What is the initial value of the new tractor?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

A company recently traded in an older model of equipment for a new model. The old model's book value was $216,000 (original cost of $476,000 less $260,000 in accumulated depreciation) and its fair value was $240,000. The company paid $64,000 to complete the exchange which has commercial substance. Required: Prepare the journal entry to record the exchange. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. View transaction list Journal entry worksheet
During 2009, Aisin Seiki Limited sold 2,000 square meters of prime commercial zoned land to a builder for ¥5,000,000. The builder gave Aisin Seiki Limited a ¥1,000,000 down payment and will pay the remaining balance of ¥4,000,000 to Aisin Seiki Limited in 2010. Aisin Seiki Limited purchased the land in 2002 for ¥3,000,000. Using the installment method, how much profit will Aisin Seiki Limited report for 2009 (in Japanese Yen, \)? Select one: O a. 600,000 b. 400,000 O c. 1,000,000 O d. 3,000,000 e. 0
Required information [The following information applies to the questions displayed below] Case A. Kapono Farms exchanged an old tractor for a newer model. The old tractor had a book value of $20,500 (original cost of $45,000 less accumulated depreciation of $24,500) and a fair value of $10,700. Kapono paid $37,000 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 $585,000 and a fair value of $870,000. Kapono paid $67,000 cash to complete the exchange. The exchange has commercial substance. Required: 1. What is the amount of gain or loss that Kapono would recognize on the exchange? What is the initial value of the new land? 2. Assume the fair value of the farmland given is $468,000 instead of $870,000. What is the amount of gain or loss that Kapono would recognize on the exchange? What is the initial value of the new land? 3. Assume the same facts as…
On August 1, two independent companies, Denver and Broncos, each own a machine and they agree to an exchange. The following information is available: Denver Cost $90,000 Broncos cost $45,000 Accumulated Depreciation Denver 55,000 Accumulated Depreciation Broncos 25,000 Fair Value Denver 28,000 Fair Value Broncos 30,000. Denver agrees to pay Broncos $2,000 to complete the exchange. Why does Denver agree to pay $2,000 to Broncos? Prepare the necessary journal entry by Denver Company to record this transaction, assuming the exchange has A) Commercial Substance B) No Commercial Substance 3) Prepare the necessary journal entry by Broncos to record this transaction, assuming the exchange has A) Commercial Substance. B) No Commercial Substance
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…
Rain Company traded a manual weather machine for an automated weather machine and gave $40,000 cash. The manual machine cost $495,000, had a net book value of $350,000, and a fair value of $360,000. The automated machine was originally purchased by Shine Company for $510,000 and had a net book value of $430,000. It has a fair market value of $450,000. Determine the value of the asset received for Rain and Shine assuming the exchange does not have commercial substance. Please include the appropriate dollar sign and commas (example $25,000).
Pearl’s Delivery Company and Martinez’s Express Delivery exchanged delivery trucks on January 1, 2020. Pearl’s truck cost €22,500. It has accumulated depreciation of €15,500 and a fair value of €3,300. Martinez’s truck cost €8,500. It has accumulated depreciation of €6,800 and a fair value of €3,300. The transaction has commercial substance. Journalize the exchange for Pearl’s Delivery Company Account Titles and Explanation Debit Credit Equipment Accumulated Depreciation-Equipment Loss on Disposal of Plant Assets Equipment please make sure the answer is correct 100%
Bonnie Inc. and Clyde Company have an exchange with no commercial substance. The asset given up by Bonnie has a book value of $120,000 and a fair value of $135,000. The asset given up by Clyde has a book value of $220,000 and a fair value of $200,000. Boot (cash) of $65,000 is received by Clyde. What amount should Bonnie record for the asset received?
Required information [The following information applies to the questions displayed below.] Case A. Kapono Farms exchanged an old tractor for a newer model. The old tractor had a book value of $15,000 (original cost of $34,000 less accumulated depreciation of $19,000) and a fair value of $9,600. Kapono paid $26,000 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 $530,000 and a fair value of $760,000. Kapono paid $56,000 cash to complete the exchange. The exchange has commercial substance. 1. What is the amount of gain or loss that Kapono would recognize on the exchange of the land? 2. Assume the fair value of the farmland given is $424,000 instead of $760,000. What is the amount of gain or loss that Kapono would recognize on the exchange? What is the initial value of the new land? 3. Assume the same facts as Requirement 1 and that the exchange lacked…
Pensacola Inc. purchased equipment on January 1, 2016 for $135,000. Ater 3 years Pensacola exchanged the equipment for a truck from Mam, Inc in a non-monetary exchange. The balance in the Accumulated Depreciation account at the time of the exchange was $75,000. Assume the exchange lacks commercial substance. At the time of the exchange, the fair value of the equipment was $77 000 and the fair vallue of the truck was $57,000. Miami paid 520,000 cashtoot to Pensacola What is the cost basis of the truck acquired by Pensacola? O $44,415 $52,585 $57,000 O $40,000 O None of the above
a111111
Jersey Inc. and Texas Co. have an exchange with no commercial substance. The asset given up by Jersey Inc. has a book value of $160,000 and a fair value of $200,000. The asset given up by Texas Co. has a book value of $260,000 and a fair value of $280,000. Boot of $80,000 is received by Texas Co. What amount should Jersey Inc. record for the asset received?