Question

The Bronco Corporation exchanged land for equipment. The land had a book value of $123,000 and a fair value of $156,000. Bronco paid the owner of the equipment $13,000 to complete the exchange which has commercial substance.
 
Required:
1. What is the fair value of the equipment?
2. Prepare the journal entry to record the exchange.
  

Answer 1

1.)		Amount in $
	Fair Value of land	156,000
	Add: cash paid for Equipment	13,000
	Fair Value of equipment	169,000

2.)	Event	General Journal	Debit $	Credit $
	1	Equipment	169,000
		Land		123,000
		Cash		13,000
		Gain on Asset Exchange		33,000
		( to record exchange of Assets )