Question

During its fiscal year ended May 31, 2018, Concord incurred $7,690 for interest expense in connection with the financing of these assets Transaction 3: On March 1, 2018, Concord Company exchanged a number of used trucks plus cash for vacant land adjacent to its plant site. (The exchange has commercial substance.) Concord intends to use the land for a parking lot. The trucks had a combined book value of $36,960, as Concord had recorded $19,210 of accumulated depreciation against these assets. Concord's purchasing agent, who has had previous dealings in the secondhand market, indicated that the trucks had a fair value of $48,150 at the time of the transaction. In addition to the trucks, Concord Company paid $19,800 cash for the land. (b) For each of the three transactions described above, determine the value at which Concord Company should record the acquired assets. (Round intermediate calculations to 5 decimal places, e.g. 1.25124 and final answers to 0 decimal places e.g. 58,971.)

Answer 1

Since the information is provided only for Transaction 3 in the picture uploaded, answer pertains to Transaction 3 only.

In the transaction the company has exchanged Used Trucks plus cash with vacant land which it intends to use as parking lot. Since the exchange has commercial substance then the company should recognize the incoming asset (i.e. land) at its Fair value adjusted with cash given or taken. But if the Fair value of the incoming asset can't be determined then the company should recognize the incoming asset at carrying value of the outgoing asset adjusted with cash given or taken.

Hence, in the above situation Concord Company shall recognize Land at $ 56,760 (36,960 + 19,800).