Question A and B

A. Pensacola Inc. exchanged old equipment for new equipment in two exchange transactions. Each transaction has commercial substance.

	Old Equipment								Cash
	Book Value				Fair Value				Received
Equipment A	$	73,700			$	80,300			$	12,800
Equipment B	$	60,300			$	55,300			$	9,100

For Equipment A, Pensacola would record the new equipment at:

Multiple Choice

• $67,500.

• $69,000.

• $71,750.

• $55,000.

B. Horton Stores exchanged land and cash of $4,000 for similar land. The book value and the fair value of the land were $88,100 and $100,000, respectively. Assuming that the exchange has commercial substance, Horton would record land-new and a gain/(loss) of:

	Land				Gain/(loss)
a.	$	104,000			$	0
b.	$	104,000			$	11,900
c.	$	92,100			$	0
d.	$	92,100			$	11,900

Multiple Choice

• Option A

• Option B

• Option C

• Option D