Question

Attach the calculation process thanks

Required information The following information applies to the questions displayed below. Case A. Kapono Farms exchanged an old tractor for a newer model. The old tractor had a book value of $21,000 (original cost of $46,000 less accumulated depreciation of $25,000) and a fair value of $10,800. Kapono paid $38,000 cash to complete the exchange. The exchange has commercial substance. Case B. Kapono Farms exchanged 100 acres of farmland for similar land. The farmland given had a book value of $590,000 and a fair value of $880,000. Kapono paid $68,000 cash to complete the exchange. The exchange has commercial substance. Required: 1.What is the amount of gain or loss that Kapono would recognize on the exchange of the tractor? 2. Assume the fair value of the old tractor is $32,000 instead of $10,800. What is the amount of gain or loss that Kapono would recognize on the exchange? What is the initial value of the new tractor? Complete this question by entering your answers in the tabs below. Required 1 Required 2 What is the amount of gain or loss that Kapono would recognize on the exchange of the tractor? Initial value of new tractor < Required 1 Required 2 >

Answer 1

Answer to Case A-1

Original Cost	46000
Less: accumulated depreciation	-25000
Book value of the asset	21000
Less: Fair value of the asset	10800
Amount of loss Kapono would recognize	10200

Answer to Case A-2

Original Cost	46000
Less: accumulated depreciation	-25000
Book value of the asset	21000
Less: Fair value of the asset	32000
Amount of gain Kapono would recognize	11000

Initial value of new tractor

Fair value of asset given up	32000
Add: Cash paid for exchange	38000
Initial value of new tractor	70000