The Tinsley Company exchanged land that it had been holding for future plant exp

Question

The Tinsley Company exchanged land that it had been holding for future plant expansion for a more suitable parcel located farther from residential areas. Tinsley carried the land at its original cost of $40,000. According to an independent appraisal, the land currently is worth $92,000. Tinsley gave $34,000 in cash to complete the transaction. Required: 1. What is the fair value of the new parcel of land received by Tinsley? 2. Prepare the journal entry to record the exchange assuming the exchange has commercial substance. (If no entry is required for an event, select "No journal entry required" in the first account field.)

Explanation / Answer

Tinsley company Fair Value of Old Land          92,000.0 Additional cash paid for new land          34,000.0 Fair Value Of New Land        126,000.0 Journal Entry Account Title Dr $ Cr $ Land (new)        126,000.0 Land (old)       40,000.0 Cash       34,000.0 Gain on Acquisition of Land       52,000.0

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