Question

Bloomington Inc. exchanged land for equipment and $2,400 in cash. The book value and the fair value of the land were $104,300 and $88,100, respectively. Bloomington would record equipment and a gain/(loss) of:________

Answer 1

Loss = $18,600

Step-by-step explanation:

Given:

Cash paid = $2,400

Book value = $104,300

Fair value = $88,100

Find:

Gain/Loss

Computation:

Equipment book value = Fair value - Cash payment

Equipment book value = $88,100 - $2,400

Equipment book value = $85,700

Loss = Equipment book value - Fair value

Loss = $104,300 - $ 85,700

Loss = $18,600