Realized gain = Fair value of the asset given up - Carrying value of the asset given up
= $85,000 - ($90,000 - $40,000)
= $35,000
As XYZ Co. paid the amount to ABC Co., no realized gain is recognized in the case of boot paid.
Recognized gain = $0
The answer is a.
Two independent companies, ABC Co. and XYZ Co., exchange buildings. The transaction lacks commercial substance. An appr...
Two independent companies, Waterway Co. and Carla Vista Co., are
in the home building business. Each owns a tract of land held for
development, but each would prefer to build on the other's land.
They agree to exchange their land. An appraiser was hired, and from
her report and the companies' records, the following information
was obtained:
Waterway's Land
Carla Vista's Land
Cost and book value
$573300
$272700
Fair value based upon
appraisal
720000
626400
The exchange was made, and...
Bismarck and Altoona exchange buildings. The transaction has commercial substance. The following information was obtained. Cost Accumulated Depreciation Fair value based upon appraisal ed Depreciation aisa Bismarck's Building $60,000 20,000 20.000 Altoona's Building $45,000 20,000 40,000 20.000 The exchange was made, and based on the difference in appraised value, Altoona paid $10,000 to Bismarck. Bismarck should recognize a gain on this exchange of: Select one: a. $0 O b. $10,000 c. $8,000 O d. $2,000 O e. $12,000