Two construction companies, Harglo and Kalman, are in the construction business. Each owns a tract of land being held for development, but each company would prefer to build on the other's land. Accordingly, they agree to exchange their land, and have the following information: Harglo's Kalman's Land Land Cost and book value $150,000 $100,000 Fair value based upon appraisal $200,000 $160,000 The exchange of land was made, and, based on the difference in appraised fair value, Kalman paid $40,000 cash to Harglo. For financial reporting purposes, Harglo would recognize a gain on this exchange in the amount of $6,000 After the exchange, Harglo would record its newly acquired land on its books at a. $120,000 b. $102,000 c. $136,000 d. $166,000
Two construction companies, Harglo and Kalman, are in the construction business. Each owns a tract of land being held for development, but each company would prefer to build on the other's land. Accordingly, they agree to exchange their land, and have the following information:
Harglo's Kalman's
Land Land
Cost and book value $150,000 $100,000
Fair value based upon appraisal $200,000 $160,000
The exchange of land was made, and, based on the difference in appraised fair value, Kalman paid $40,000 cash to Harglo.
For financial reporting purposes, Harglo would recognize a gain on this exchange in the amount of $6,000
After the exchange, Harglo would record its newly acquired land on its books at
a. $120,000
b. $102,000
c. $136,000
d. $166,000
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