Question
On November 1, McGraw Corp. purchased land by transferring $60,000 cash and a building to the other company. The building it gave up has an
On November 1, McGraw Corp. purchased land by transferring $60,000 cash and a building to the other company. The building it gave up has an original cost of $900,000, a book value of $400,000, and a fair market value of $700,000.
1. Prepare the journal entry McGraw should make to record the exchange of the building and cash for the land, assuming the exchange has commercial substance.
Date |
| Debit | Credit |
Nov 1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2. If the above exchange were deemed to have non-commercial substance, by what amount should the Land account be debited?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-text-image.webp)
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Step: 3
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started