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 $56,250. According to an independent appraisal, the land currently is worth $135,000. Tinsley paid $17,000 in cash to complete the transaction. Required: 1. What is the fair value of the new parcel of land received by Tinsley assuming the exchange has commercial substance? 2. Prepare the journal entry to record the exchange assuming the exchange has commercial substance. 3. Prepare the journal entry to record the exchange assuming the exchange lacks commercial substance. 4. Prepare the journal entry to record the exchange except that Tinsley received $27,000 in the exchange, and the exchange lacks commercial substance. Complete this question by entering your answers in the tabs below. Reqi Reg 2 and 3 Reg 4 What is the fair value of the new parcel of land received by Tinsley assuming the exchange has commercial substance? Fair value $ 152,000 Reqi Req 2 and 3 >

Answer 1

land faic valve of new Fai Value o old land Carh t even tf 17000) CANS (135000 152000 fair Volue Isa 000 a 3 No Even! Genenal Javrnel hand-New* Cash hand old Gan Cnedif Debil $152000 $17000 56250 78 750 hand-New Casl hand-old |73350 7000 56356 aplanaton 4. hand-new - ($ 135000 t $1700)= 152000 Gain 35000 - f56a50 ) - $78 7S0 hand- new ( 56250 t 7000) 73 250

(1 General founnal Land- new Cash Gain hand- old NoEvend Debel Crudet 45000 S 27000 Caplanalons bookvaleCedvaleid geven FamValue (13S000- 56250)X ( 27000 f35000 (78 750X0.20) f 15750 Nole The are value reecived uell equal the fain change valuve in an even ven [sYs750t856250)-$ 27000] ASOOD a.hanot new