Two independent companies, Hager Co. and Shaw Co., are in the home building business. Each owns a tract of land held for development, but each would prefer to build on the other's land. They agree to exchange their land. An appraiser was hired, and from her report and the companies' records, the following information was obtained: Cost and book value Fair value based upon appraisal Hager's Land $504000. $576000. $630000. $720000. $576000 720000 Shaw's Land $360000 630000 The exchange was made, and based on the difference in appraised fair values, Shaw paid $90000 to Hager. The exchange lacked commercial substance. The new land should be recorded on Hager's books at
Two independent companies, Hager Co. and Shaw Co., are in the home building business. Each owns a tract of land held for development, but each would prefer to build on the other's land. They agree to exchange their land. An appraiser was hired, and from her report and the companies' records, the following information was obtained: Cost and book value Fair value based upon appraisal Hager's Land $504000. $576000. $630000. $720000. $576000 720000 Shaw's Land $360000 630000 The exchange was made, and based on the difference in appraised fair values, Shaw paid $90000 to Hager. The exchange lacked commercial substance. The new land should be recorded on Hager's books at
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Two independent companies, Hager Co. and Shaw Co., are in the home building business. Each owns a tract of land held
for development, but each would prefer to build on the other's land. They agree to exchange their land. An appraiser was
hired, and from her report and the companies' records, the following information was obtained:
Cost and book value
Fair value based upon appraisal
Hager's Land
$576000
720000
$504000.
$576000.
$630000.
$720000.
Shaw's Land
$360000
630000
The exchange was made, and based on the difference in appraised fair values, Shaw paid $90000 to Hager. The exchange
lacked commercial substance.
The new land should be recorded on Hager's books at
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