Exchange of Assets

Minor Baseball Company had a player contract with Doe that was recorded in its accounting records at $145,000. Better Baseball Company had a player contract with Smith that was recorded in its accounting records at $140,000. Minor traded Doe to Better for Smith by exchanging each players contract. The fair value of each contract was $150,000.

Required:

What amounts should each company show in its accounting records for the exchange of player contracts?

Minor will value Smith's contract at $ fill in the blank

1. Better will value Doe's contract at $fill in the blank

2. Minor will report a gain of $fill in the blank

3 and Doe will report a gain of $fill in the blank 4.