The Bronco Corporation exchanged land for equipment. The land had a book value o

Question

The Bronco Corporation exchanged land for equipment. The land had a book value of $128,000 and a fair value of $166,000. Bronco paid the owner of the equipment $18,000 to complete the exchange which has commercial substance.

Record the entry of exchange of assets.

The Bronco Corporation exchanged land for equipment. The land had a book value of $128,000 and a fair value of $166,000. Bronco paid the owner of the equipment $18,000 to complete the exchange which has commercial substance.

Required: What is the fair value of the equipment?

Record the entry of exchange of assets.

Explanation / Answer

Solution:

1.

Value of Equipment = Book value of land + Cash Paid

Value of Equipment = $ 128,000 + $ 18,000

Value of Equipment = $ 146,000

2.

Jounal entry -

Equiment 146,000 Land 128,000 Cash 18,000

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