The Tinsley Company exchanged land that it had been holding for future plant exp
ID: 2466202 • Letter: T
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 $32,500. According to an independent appraisal, the land currently is worth $77,000. Tinsley gave $19,000 in cash to complete the transaction.
What is the fair value of the new parcel of land received by Tinsley assuming the exchange has commercial substance
Record the exchange of land assuming the exchange has commercial substance.(journal entry)
Record the exchange of land assuming the exchange lacks commercial substance.
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 $32,500. According to an independent appraisal, the land currently is worth $77,000. Tinsley gave $19,000 in cash to complete the transaction.
Explanation / Answer
Journal Entries
Land (77,000+19,000)
$96,000
To Cash
$19,000
To land
32,500
To Gain on exchange
44,500
(2) land (32,500 +19,000)
51,500
To Cash
19,000
To land
32,500
Land (77,000+19,000)
$96,000
To Cash
$19,000
To land
32,500
To Gain on exchange
44,500
(2) land (32,500 +19,000)
51,500
To Cash
19,000
To land
32,500
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