problem 2

Briefly explain how a material adjustment to inventory due to application of the lower-of-cost-or-market rule should be reported in the financial statements. Solve the following problems in the space provided. Please show all computations. If you need extra space to complete an answer, use the additional page at the end of the exam. Point values are given next to each problem. Ford Inc. exchanged land and $7,500 cash for material handling equipment. The land had a book value of $75,000 and a market value of $105,000. Assume the exchange has commercial substance. Required: Prepare the journal entry to record the exchange. Briefly explain how a material adjustment to inventory due to application of the lower-of-cost-or-market rule should be reported in the financial statements. Solve the following problems in the space provided. Please show all computations. If you need extra space to complete an answer, use the additional page at the end of the exam. Point values are given next to each problem. Ford Inc. exchanged land and $7,500 cash for material handling equipment. The land had a book value of $75,000 and a market value of $105,000. Assume the exchange has commercial substance. Required: Prepare the journal entry to record the exchange