Nonmonetary Exchange Exchange of non-monetary assets for another non-monetary asset is known as nonmonetary exchange. Exchange has commercial substance: If an exchange (Example: exchange of land for another non-monetary asset other than land) is likely to have a change in the future cash flows , then it is known as exchange has commercial substance. In this case, an exchange of non-monetary assets, which have commercial substance, is recorded at its fair value, and then resulted gain or loss must be recognized by determining the difference between the fair value and book value. Exchange lacks commercial substance: If an exchange (Example: exchange of land for another land) is expected that it will not change the future cash flows, then such exchange is known as exchange lacks commercial substance. In this case, an exchange lacks commercial substance; therefore new non-monetary asset would be value at the book value of the old non-monetary asset. To determine: The amount of gain or loss that K Farms would recognize on the exchange of tracker, and also determine the initial value of the new tractor.

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Answer 1

Question

Chapter 10, Problem 10.8P

Case A (Requirement (1))

To determine

Nonmonetary Exchange

Exchange of non-monetary assets for another non-monetary asset is known as nonmonetary exchange.

Exchange has commercial substance:

If an exchange (Example: exchange of land for another non-monetary asset other than land) is likely to have a change in the future cash flows, then it is known as exchange has commercial substance. In this case, an exchange of non-monetary assets, which have commercial substance, is recorded at its fair value, and then resulted gain or loss must be recognized by determining the difference between the fair value and book value.

Exchange lacks commercial substance:

If an exchange (Example: exchange of land for another land) is expected that it will not change the future cash flows, then such exchange is known as exchange lacks commercial substance. In this case, an exchange lacks commercial substance; therefore new non-monetary asset would be value at the book value of the old non-monetary asset.

To determine: The amount of gain or loss that K Farms would recognize on the exchange of tracker, and also determine the initial value of the new tractor.

Case A Requirement (2)

To determine

The amount of gain or loss that K Farms would recognize on the exchange of tracker, and also determine the initial value of the new tractor (Assume, the fair value of the old tractor is $14,000).

Case B (Requirement (1))

To determine

The amount of gain or loss that K Farms would recognize on the exchange of land, and also determine the initial value of the new land.

Case B (Requirement (2))

To determine

The amount of gain or loss that K Farms would recognize on the exchange of land, and also determine the initial value of the land (Assume that the fair value of the old land is $400,000).

Case B (Requirement (3))

To determine

The amount of gain or loss that K Farms would recognize on the exchange of land, and also determine the initial value of the land (Assume that the exchange lacks commercial substance).

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The comparative balance sheets and an income statement for Raceway Corporation follow. Balance Sheets As of December 31 Year 2 Year 1 Assets Cash $ 6,300 $ 48,400 Accounts receivable 10,200 7,260 Inventory 45,200 56,000 Prepaid rent 700 2,140 Equipment 140,000 144,000 Accumulated depreciation (73,400) (118,000) Land 116,000 50,000 Total assets $ 245,000 $ 189,800 Liabilities Accounts payable (inventory) $ 37,200 $ 40,000 Salaries payable 12,200 10,600 Stockholders’ equity Common stock, $50 par value 150,000 120,000 Retained earnings 45,600 19,200 Total liabilities and stockholders’ equity $ 245,000 $ 189,800 Income Statement For the Year Ended December 31, Year 2 Sales $ 480,000 Cost of goods sold (264,000) Gross profit 216,000 Operating expenses Depreciation expense (11,400) Rent expense (7,000) Salaries expense (95,200) Other operating expenses (76,000) Net income $ 26,400 Other Information Purchased…

Please help holy tamale I have been staring at this for hours.

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Answer 2

Question

Chapter 10, Problem 10.8P

Case A (Requirement (1))

To determine

Nonmonetary Exchange

Exchange of non-monetary assets for another non-monetary asset is known as nonmonetary exchange.

Exchange has commercial substance:

If an exchange (Example: exchange of land for another non-monetary asset other than land) is likely to have a change in the future cash flows, then it is known as exchange has commercial substance. In this case, an exchange of non-monetary assets, which have commercial substance, is recorded at its fair value, and then resulted gain or loss must be recognized by determining the difference between the fair value and book value.

Exchange lacks commercial substance:

If an exchange (Example: exchange of land for another land) is expected that it will not change the future cash flows, then such exchange is known as exchange lacks commercial substance. In this case, an exchange lacks commercial substance; therefore new non-monetary asset would be value at the book value of the old non-monetary asset.

To determine: The amount of gain or loss that K Farms would recognize on the exchange of tracker, and also determine the initial value of the new tractor.

Case A Requirement (2)

To determine

The amount of gain or loss that K Farms would recognize on the exchange of tracker, and also determine the initial value of the new tractor (Assume, the fair value of the old tractor is $14,000).

Case B (Requirement (1))

To determine

The amount of gain or loss that K Farms would recognize on the exchange of land, and also determine the initial value of the new land.

Case B (Requirement (2))

To determine

The amount of gain or loss that K Farms would recognize on the exchange of land, and also determine the initial value of the land (Assume that the fair value of the old land is $400,000).

Case B (Requirement (3))

To determine

The amount of gain or loss that K Farms would recognize on the exchange of land, and also determine the initial value of the land (Assume that the exchange lacks commercial substance).

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Answer 3

Question

Chapter 10, Problem 10.8P

Case A (Requirement (1))

To determine

Nonmonetary Exchange

Exchange of non-monetary assets for another non-monetary asset is known as nonmonetary exchange.

Exchange has commercial substance:

If an exchange (Example: exchange of land for another non-monetary asset other than land) is likely to have a change in the future cash flows, then it is known as exchange has commercial substance. In this case, an exchange of non-monetary assets, which have commercial substance, is recorded at its fair value, and then resulted gain or loss must be recognized by determining the difference between the fair value and book value.

Exchange lacks commercial substance:

If an exchange (Example: exchange of land for another land) is expected that it will not change the future cash flows, then such exchange is known as exchange lacks commercial substance. In this case, an exchange lacks commercial substance; therefore new non-monetary asset would be value at the book value of the old non-monetary asset.

To determine: The amount of gain or loss that K Farms would recognize on the exchange of tracker, and also determine the initial value of the new tractor.

Case A Requirement (2)

To determine

The amount of gain or loss that K Farms would recognize on the exchange of tracker, and also determine the initial value of the new tractor (Assume, the fair value of the old tractor is $14,000).

Case B (Requirement (1))

To determine

The amount of gain or loss that K Farms would recognize on the exchange of land, and also determine the initial value of the new land.

Case B (Requirement (2))

To determine

The amount of gain or loss that K Farms would recognize on the exchange of land, and also determine the initial value of the land (Assume that the fair value of the old land is $400,000).

Case B (Requirement (3))

To determine

The amount of gain or loss that K Farms would recognize on the exchange of land, and also determine the initial value of the land (Assume that the exchange lacks commercial substance).

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Answer 4

Question

Chapter 10, Problem 10.8P

Case A (Requirement (1))

To determine

Nonmonetary Exchange

Exchange of non-monetary assets for another non-monetary asset is known as nonmonetary exchange.

Exchange has commercial substance:

If an exchange (Example: exchange of land for another non-monetary asset other than land) is likely to have a change in the future cash flows, then it is known as exchange has commercial substance. In this case, an exchange of non-monetary assets, which have commercial substance, is recorded at its fair value, and then resulted gain or loss must be recognized by determining the difference between the fair value and book value.

Exchange lacks commercial substance:

If an exchange (Example: exchange of land for another land) is expected that it will not change the future cash flows, then such exchange is known as exchange lacks commercial substance. In this case, an exchange lacks commercial substance; therefore new non-monetary asset would be value at the book value of the old non-monetary asset.

To determine: The amount of gain or loss that K Farms would recognize on the exchange of tracker, and also determine the initial value of the new tractor.

Case A Requirement (2)

To determine

The amount of gain or loss that K Farms would recognize on the exchange of tracker, and also determine the initial value of the new tractor (Assume, the fair value of the old tractor is $14,000).

Case B (Requirement (1))

To determine

The amount of gain or loss that K Farms would recognize on the exchange of land, and also determine the initial value of the new land.

Case B (Requirement (2))

To determine

The amount of gain or loss that K Farms would recognize on the exchange of land, and also determine the initial value of the land (Assume that the fair value of the old land is $400,000).

Case B (Requirement (3))

To determine

The amount of gain or loss that K Farms would recognize on the exchange of land, and also determine the initial value of the land (Assume that the exchange lacks commercial substance).

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Answer 5

Chapter 10, Problem 10.8P

Case A (Requirement (1))

To determine

Nonmonetary Exchange

Exchange of non-monetary assets for another non-monetary asset is known as nonmonetary exchange.

Exchange has commercial substance:

If an exchange (Example: exchange of land for another non-monetary asset other than land) is likely to have a change in the future cash flows, then it is known as exchange has commercial substance. In this case, an exchange of non-monetary assets, which have commercial substance, is recorded at its fair value, and then resulted gain or loss must be recognized by determining the difference between the fair value and book value.

Exchange lacks commercial substance:

If an exchange (Example: exchange of land for another land) is expected that it will not change the future cash flows, then such exchange is known as exchange lacks commercial substance. In this case, an exchange lacks commercial substance; therefore new non-monetary asset would be value at the book value of the old non-monetary asset.

To determine: The amount of gain or loss that K Farms would recognize on the exchange of tracker, and also determine the initial value of the new tractor.

Case A Requirement (2)

To determine

The amount of gain or loss that K Farms would recognize on the exchange of tracker, and also determine the initial value of the new tractor (Assume, the fair value of the old tractor is $14,000).

Case B (Requirement (1))

To determine

The amount of gain or loss that K Farms would recognize on the exchange of land, and also determine the initial value of the new land.

Case B (Requirement (2))

To determine

The amount of gain or loss that K Farms would recognize on the exchange of land, and also determine the initial value of the land (Assume that the fair value of the old land is $400,000).

Case B (Requirement (3))

To determine

The amount of gain or loss that K Farms would recognize on the exchange of land, and also determine the initial value of the land (Assume that the exchange lacks commercial substance).

Answer 6

Chapter 10, Problem 10.8P

Case A (Requirement (1))

To determine

Nonmonetary Exchange

Exchange of non-monetary assets for another non-monetary asset is known as nonmonetary exchange.

Exchange has commercial substance:

If an exchange (Example: exchange of land for another non-monetary asset other than land) is likely to have a change in the future cash flows, then it is known as exchange has commercial substance. In this case, an exchange of non-monetary assets, which have commercial substance, is recorded at its fair value, and then resulted gain or loss must be recognized by determining the difference between the fair value and book value.

Exchange lacks commercial substance:

If an exchange (Example: exchange of land for another land) is expected that it will not change the future cash flows, then such exchange is known as exchange lacks commercial substance. In this case, an exchange lacks commercial substance; therefore new non-monetary asset would be value at the book value of the old non-monetary asset.

To determine: The amount of gain or loss that K Farms would recognize on the exchange of tracker, and also determine the initial value of the new tractor.

Answer 7

Chapter 10, Problem 10.8P

Case A (Requirement (1))

To determine

Nonmonetary Exchange

Exchange of non-monetary assets for another non-monetary asset is known as nonmonetary exchange.

Exchange has commercial substance:

If an exchange (Example: exchange of land for another non-monetary asset other than land) is likely to have a change in the future cash flows, then it is known as exchange has commercial substance. In this case, an exchange of non-monetary assets, which have commercial substance, is recorded at its fair value, and then resulted gain or loss must be recognized by determining the difference between the fair value and book value.

Exchange lacks commercial substance:

If an exchange (Example: exchange of land for another land) is expected that it will not change the future cash flows, then such exchange is known as exchange lacks commercial substance. In this case, an exchange lacks commercial substance; therefore new non-monetary asset would be value at the book value of the old non-monetary asset.

To determine: The amount of gain or loss that K Farms would recognize on the exchange of tracker, and also determine the initial value of the new tractor.

Answer 8

Case A Requirement (2)

To determine

The amount of gain or loss that K Farms would recognize on the exchange of tracker, and also determine the initial value of the new tractor (Assume, the fair value of the old tractor is $14,000).

Answer 9

Case A Requirement (2)

To determine

The amount of gain or loss that K Farms would recognize on the exchange of tracker, and also determine the initial value of the new tractor (Assume, the fair value of the old tractor is $14,000).

Answer 10

Case B (Requirement (1))

To determine

The amount of gain or loss that K Farms would recognize on the exchange of land, and also determine the initial value of the new land.

Answer 11

Case B (Requirement (1))

To determine

The amount of gain or loss that K Farms would recognize on the exchange of land, and also determine the initial value of the new land.

Answer 12

Case B (Requirement (2))

To determine

The amount of gain or loss that K Farms would recognize on the exchange of land, and also determine the initial value of the land (Assume that the fair value of the old land is $400,000).

Answer 13

Case B (Requirement (2))

To determine

The amount of gain or loss that K Farms would recognize on the exchange of land, and also determine the initial value of the land (Assume that the fair value of the old land is $400,000).

Answer 14

Case B (Requirement (3))

To determine

The amount of gain or loss that K Farms would recognize on the exchange of land, and also determine the initial value of the land (Assume that the exchange lacks commercial substance).

Answer 15

Case B (Requirement (3))

To determine

The amount of gain or loss that K Farms would recognize on the exchange of land, and also determine the initial value of the land (Assume that the exchange lacks commercial substance).

Answer 16

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Answer 17

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Answer 18

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Answer 19

Ch. 10 - Prob. 10.1Q Ch. 10 - Prob. 10.2Q Ch. 10 - Prob. 10.3Q Ch. 10 - Prob. 10.4Q Ch. 10 - Prob. 10.5Q Ch. 10 - Prob. 10.6Q Ch. 10 - When an asset is acquired and a note payable is...Ch. 10 - Explain how assets acquired in exchange for equity...Ch. 10 - Prob. 10.9Q Ch. 10 - Prob. 10.10Q

The amount of gain or loss that K Farms would recognize on the exchange of tracker, and also determine the initial value of the new tractor (Assume, the fair value of the old tractor is $14,000).

The amount of gain or loss that K Farms would recognize on the exchange of land, and also determine the initial value of the new land.

The amount of gain or loss that K Farms would recognize on the exchange of land, and also determine the initial value of the land (Assume that the fair value of the old land is $400,000).

The amount of gain or loss that K Farms would recognize on the exchange of land, and also determine the initial value of the land (Assume that the exchange lacks commercial substance).

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