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