Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The following information applies to the questions displayed below. Case A . Kapono Farms exchanged an old tractor for a newer model. The old tractor

The following information applies to the questions displayed below. Case A. Kapono Farms exchanged an old tractor for a newer model. The old tractor had a book value of $14,000(original cost of $32,000 less accumulated depreciation of $18,000) and a fair value of $9,400Kapono paid $24,000 cash to complete the exchange. The exchange has commercial substance . Case B. Kapono Farms exchanged 100 acres of farmland for similar land. The farmland given had a book value of $520,000 and a fair value of $740,000 Kapono paid $54,000 cash to complete the exchange. The exchange
has commercial substance.
Required: 1. What is the amount of gain or loss that Kapono would recognize on the exchange ? What is the initial value of the new land ?
2. Assume the fair value of the farmland given is $ 416,000 instead of $ 740,000. What is the amount of gain or loss that Kapono would recognize on the exchange ? What is the initial value of the new land?
3. Assume the same facts as Requirement 1 and that the exchange lacked commercial substance What is the amount of gain or loss that Kapono would recognize on the exchange? What is the initial value of the new land?
4. Assume the same facts as Requirement 2 and that the exchange lacked commercial substance . Assume the fair value of the farmland given is $ 416,000 instead of $740,000. What is the amount of gain or loss that Kapono would recognize on the exchange ? What is the initial value of the new land?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Horngrens Accounting Volume 1

Authors: Tracie Miller Nobles, Brenda Mattison, Ella Mae Matsumura

12th Canadian Edition

0136889373, 9780136889373

More Books

Students also viewed these Accounting questions

Question

Show enthusiasm for the position (but not too much).

Answered: 1 week ago

Question

Discuss the goals of financial management.

Answered: 1 week ago

Question

What were some of the team norms at Casper?

Answered: 1 week ago

Question

What were some of the team roles at Casper?

Answered: 1 week ago