Question

A company exchanged land for equipment and $2,300 in cash. The book value and the fair value of the land were $105,400 and $89,700, respectively. Assuming that the exchange has commercial substance, the company would record equipment and a gain/(loss) of: Equipment Gain/(loss) a.$87,400 $2,300 b.$105,400 $(2,300) c.$87,400 $(15,700) d.None of these answer choices are correct.

Answer 1

c.$87,400 $(15,700)

Step-by-step explanation:

Equipment ($89,700- $2,300) $87,400

Cash $2,300

Loss ($105,400 – $89,700) $15,700

Land (book value)105,400

Therefore Assuming that the exchange has commercial substance, the company would record equipment and a gain/(loss) of $87,400 $(15,700)