What is Koch's adjusted basis in machine 2 after the exchange?
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Koch traded machine 1 for machine 2 when the fair market value of both machines was $50,000. Koch originally purchased machine 1 for $76,300 and machine 1's adjusted basis was $40,650 at the time of the exchange. Machine 2's seller purchased it for $64,350 and machine 2's adjusted basis was $55,650 at the time of the exchange. What is Koch's adjusted basis in machine 2 after the exchange?
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Machine 1 and Machine 2 are two machines with similar market values.
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- Christina Co. has a factory equipment with a carrying amount of P700,000 and has a remaining useful life of 7 years. On January 1, 2020, Christina agreed to an exchange transaction with Kat & Inc. to transfer the equipment to the latter. The transfer satisfied the requirements of PFRS 15 to be a sale and Christina immediately leased it back for a lease term equal to the remaining life of the equipment. The sales price amounted to P500,000 while annual rental payable at the end of each year is P100,000 for an implicit rate of 10%. Selling price is equal to fair value. How much loss shall Christina recognize in relation to the sale and leaseback transaction? a. 681,578.63 b. 200,000 c. 194,736.75 d. 5,263.25China 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…
- GEE Company and EYCH Inc. decided to exchange machineries on January 1, 2019. The machine of GEE (Machine G) was purchased in January 1, 2016 for $1,000,000. The estimated useful life of the machine is 10 years, with no residual value. On the date of the exchange, Machine G's fair value is $680,000. EYCH's machine (Machine H) was purchased on January 1, 2018, for $2,500,000. The estimated useful life of the machine is 5 years, with no residual value. The fair value of Machine H on the date of exchange is $2,100,000. Because of the difference in the fair values, included in the agreement is a stipulation wherein GEE shall pay $1,500,000. The exchange is considered to be with commercial substance. How much shall EYCH Inc. initially recognize Machine G? A. $600,000 B. $2,000,000 C. $680,000 D. $2,100,000Case 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…Alvarez and Reymond, both NGAs, exchanged their equipment. Relevant data is presented below Alvarez Reymond Carrying amount 85,000 130,000 Fair value 95,000 115,000 Cash paid by Alvarez to Reymond 15,000 How much is the initial measurement of the equipment received by Reymond if the exchange has a commercial substance? Refer to the previous question, how much is the gain (loss) recognized by Reymond?
- Rizzo's Delivery Company and Overland's Express Delivery exchanged delivery trucks on January 1, 2022. Rizzo's truck cost $22,000. It has accumulated depreciation of $15,000 and a fair value of $3,000. Overland's truck cost $10,000. It has accumulated depreciation of $8,000 and a fair value of $3,000. The transaction has commercial substance. (a) Journalize the exchange for Rizzo's Delivery Company. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Include in your journal entry separate account entries for both the new and old equipment.) Account Titles and Explanation Debit CreditOn January 1, 2021, Smith Company sold a piece of machinery to Gaby Company for P1,900,000. Because of the entity's commitments to its customers to provide their needs for the next three years, Smith Company simultaneously leased back the machinery. The transfer of the asset to the buyer qualifies to be accounted for as a sale under IFRS 15. Information relating to this transaction follows: Fair value of machinery - P2,200,000 Carrying amount of machinery - P1, 700,000 Remaining useful life of the machinery - 8 years Lease term - 3 years Annual rent payable at the end of each year beginning, December 31, 2021- P500,000 Market rate of interest - 10% The present value of an ordinary annuity of 1 at 10% for 3 periods is 2.4869 The present value of an annuity due of 1 at 10% for 3 periods is 2.7355 1. How much is the interest expense for 2021 on the lease liability relating to the right retained in the sale-leaseback transaction? (round off your final answer to the nearest peso value)…The Tuvok Company exchanged an old asset with a $125,700 tax basis and a $155,000 FMV for a new asset with a $147,250 FMV. Assume that this transaction is a like-kind exchange. Write all numbers with a comma, but no dollar sign (example: 130,000). a. For the exchange to occur (and be nontaxable), how much boot (if any) does Tuvok needs to receive? b. Calculate the gain realized: Calculate the gain recognized: c. Calculate the basis of the new asset for Tuvok: d. Assume the transaction is not a like-kind exchange and is a taxable transaction. Calculate the gain realized: Calculate the gain recognized:
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