Business, 16.07.2019 02:10 kerarucker12pe384k

Case a. kapono farms exchanged an old tractor for a newer model. the old tractor had a book value of $13,500 (original cost of $31,000 less accumulated depreciation of $17,500) and a fair value of $9,300. kapono paid $23,000 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 tractor? 2. assume the fair value of the old tractor is $17,000 instead of $9,300. what is the amount of gain or loss that kapono would recognize on the exchange? what is the initial value of the new tractor?

Answers: 1

Show answers

Answers

Answer from: kekeke68

1. Gain or loss on exchange = $4,200 (Loss)

Initial value of the new tractor = $32,300

2. In case the fair value of old tractor = $17,000

Gain or loss on exchange = $3,500 Gain

Initial value of the new tractor = $40,000

Explanation:

Note: When a transaction has commercial substance, it means it is marketable and can be sold at fair value provided, in that case book value of old asset to be sold is not considered for calculating initial cost of new asset.

Since the transaction has commercial substance

Fair value of the old tractor will be considered.

Cost of new tractor = Cash paid + Fair value of old tractor

= $23,000 + $9,300 = $32,300

1. Gain or loss on exchange = Exchange value of old tractor - Book value of old tractor

Exchange value of old tractor = Fair value of old tractor as transaction had commercial substance = $9,300

Gain or loss on exchange = $9,300 - $13,500 = -$4,200 (Loss)

Initial value of the new tractor = Cost of new tractor as computed above = $32,300

2. In case the fair value of old tractor = $17,000

Then

Gain or loss on exchange = Exchange value of old tractor - Book value of old tractor = $17,000 - $13,500 = $3,500 Gain

because exchange value of old tractor = Fair value of old tractor as transaction had commercial substance

Initial value of the new tractor = Cost of new tractor = $23,000 + $17,000 = $40,000

Final Answer is as follows:

1. Gain or loss on exchange = $4,200 (Loss)

Initial value of the new tractor = $32,300

2. In case the fair value of old tractor = $17,000

Gain or loss on exchange = $3,500 Gain

Initial value of the new tractor = $40,000

Answer from: Quest

If this system has a way of sending an announcement to all 50 then send an announcement, if not use email." monday a new dress code will be for men and women).all supervisors have the responsibility to call staff that are not here today.

Answer from: Quest

Gamma-rays can kill living cells, a fact which medicine uses to its advantage, using gamma-rays to kill cancerous cells.

Another question on Business

Business, 22.06.2019 02:30

Ds unlimited has the following transactions during august. august 6 purchases 58 handheld game devices on account from gamegirl, inc., for $140 each, terms 2/10, n/60. august 7 pays $340 to sure shipping for freight charges associated with the august 6 purchase. august 10 returns to gamegirl three game devices that were defective. august 14 pays the full amount due to gamegirl. august 23 sells 38 game devices purchased on august 6 for $160 each to customers on account. the total cost of the 38 game devices sold is $5,448.51. required: record the transactions of ds unlimited, assuming the company uses a perpetual inventory system. (if no entry is required for a transaction/event, select "no journal entry required" in the first account field. round your answers to 2 decimal places.)

Answers: 2

Answer

Business, 22.06.2019 04:30

Required prepare the necessary adjusting entries in the general journal as of december 31, assuming the following: on september 1, the company entered into a prepaid equipment maintenance contract. birch company paid $3,400 to cover maintenance service for six months, beginning september 1. the payment was debited to prepaid maintenance. supplies on hand at december 31 are $3,900. unearned commission fees at december 31 are $7,000. commission fees earned but not yet billed at december 31 are $3,500. (note: debit fees receivable.) birch company's lease calls for rent of $1,600 per month payable on the first of each month, plus an annual amount equal to 1% of annual commissions earned. this additional rent is payable on january 10 of the following year. (note: be sure to use the adjusted amount of commissions earned in computing the additional rent.)

Answers: 1

Answer

Business, 22.06.2019 08:30

What is the equity method balance in the investment in lindman account at the end of 2018?

Answers: 2

Answer

Business, 22.06.2019 17:30

Jeanie had always been interested in how individuals and businesses effectively allocate their resources in order to accomplish personal and organizational goals. that’s why she majored in economics and took on an entry-level position at an accounting firm. she is very interested in further advancing her career by looking into a specialization that builds upon her academic background, and her interest in deepening her understanding of how companies adjust their operating results to incorporate the economic impacts of their practices on internal and external stakeholders. which specialization could jeanie follow to get the best of both worlds? jeanie should chose to get the best of both worlds.

Answers: 2

Answer

You know the right answer?

Case a. kapono farms exchanged an old tractor for a newer model. the old tractor had a book value of...

Questions