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  • Chapter 10 in Class Problems DAY 2

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    Abdullah alhamaad
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    Kapono Farms exchanged an old tractor for a newer model, recognizing a $3,000 gain on the exchange where the old tractor had a book value of $12,000 and fair value of $9,000, and Kapono paid $20,000 cash for the new tractor. A second problem details Kapono exchanging 100 acres of farmland for similar land, recognizing a $200,000 gain where the farmland given had a $500,000 book value and $700,000 fair value, paying $50,000 cash for the new land. Journal entries are required to record the transactions.

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    Kapono Farms exchanged an old tractor for a newer model, recognizing a $3,000 gain on the exchange where the old tractor had a book value of $12,000 and fair value of $9,000, and Kapono paid $20,000 cash for the new tractor. A second problem details Kapono exchanging 100 acres of farmland for similar land, recognizing a $200,000 gain where the farmland given had a $500,000 book value and $700,000 fair value, paying $50,000 cash for the new land. Journal entries are required to record the transactions.

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    © All Rights Reserved
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    13 views1 page

    Chapter 10 in Class Problems DAY 2

    Uploaded by

    Abdullah alhamaad
    Kapono Farms exchanged an old tractor for a newer model, recognizing a $3,000 gain on the exchange where the old tractor had a book value of $12,000 and fair value of $9,000, and Kapono paid $20,000 cash for the new tractor. A second problem details Kapono exchanging 100 acres of farmland for similar land, recognizing a $200,000 gain where the farmland given had a $500,000 book value and $700,000 fair value, paying $50,000 cash for the new land. Journal entries are required to record the transactions.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    of 1

    Chapter 10 In-Class problems (Day 2)

    Problem 1
    Kapono Farms exchanged an old tractor for a newer model. The old tractor had a book value of $12,000 (original
    cost of $28,000 less accumulated depreciation of $16,000) and a fair value of $9,000. Kapono paid $20,000 cash to
    complete the exchange. The exchange has commercial substance.
     
    1. What is the amount of gain or loss that Kapono would recognize on the exchange? What is the initial value of the
    new tractor? Complete the appropriate journal entries.
    2. Assume the fair value of the old tractor is $14,000 instead of $9,000. What is the amount of gain or loss that
    Kapono would recognize on the exchange? What is the initial value of the new tractor? Complete the appropriate
    journal entries.

    Problem 2
    Kapono Farms exchanged 100 acres of farmland for similar land. The farmland given had a book value of $500,000
    and a fair value of $700,000. Kapono paid $50,000 cash to complete the exchange. The exchange has commercial
    substance.
     
    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? Complete the appropriate journal entries.
    2. Assume the fair value of the farmland given is $400,000 instead of $700,000. What is the amount of gain or loss
    that Kapono would recognize on the exchange? What is the initial value of the new land? Complete the appropriate
    journal entries.
    3. Assume 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? Complete the appropriate journal entries.

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