[The following information applies to the questions displayed below.] Case A. Kapono Farms exchanged an old tractor for a newer model. The old tractor h (original cost of $33,000 less accumulated depreciation of $18,500) and a fair value o $25,000 cash to complete the exchange. The exchange has commercial substance. Case R Kanono Farms exchanged acres of farmland for similar land The farmlan
[The following information applies to the questions displayed below.] Case A. Kapono Farms exchanged an old tractor for a newer model. The old tractor h (original cost of $33,000 less accumulated depreciation of $18,500) and a fair value o $25,000 cash to complete the exchange. The exchange has commercial substance. Case R Kanono Farms exchanged acres of farmland for similar land The farmlan
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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 $14,500
(original cost of $33,000 less accumulated depreciation of $18,500) and a fair value of $9,500. Kapono paid
$25,000 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
$525,000 and a fair value of $750,000. Kapono paid $55,000 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 of the tractor?
2. Assume the fair value of the old tractor is $19,000 instead of $9,50O. What is the amount of gain or loss that Kapono would
recognize on the exchange? What is the initial value of the new tractor?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F9e32f66d-09c4-42e8-ae49-7bf524a7c65f%2Facdccbfa-bcbc-4dc0-9df3-1a422dc4e22a%2F3l0wq0k_processed.png&w=3840&q=75)
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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 $14,500
(original cost of $33,000 less accumulated depreciation of $18,500) and a fair value of $9,500. Kapono paid
$25,000 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
$525,000 and a fair value of $750,000. Kapono paid $55,000 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 of the tractor?
2. Assume the fair value of the old tractor is $19,000 instead of $9,50O. What is the amount of gain or loss that Kapono would
recognize on the exchange? What is the initial value of the new tractor?
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