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# HW_9 - Problem 10-8 Case A Requirement 1 Book value less...

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Problem 10-8 Case A. Requirement 1 Book value less fair value = loss on exchange \$12,000 - 9,000 = \$3,000 loss Fair value of old tractor + cash given = Initial value of new tractor \$9,000 + 20,000 = \$29,000 Journal entry (not required): New tractor (\$9,000 + 20,000) .......................................... 29,000 Accumulated depreciation - old asset (account balance) ... 16,000 Loss (\$12,000 – 9,000) ................................................................ 3,000 Cash ......................................................................... 20,000 Old tractor (account balance) ........................................ 28,000 Requirement 2 Fair value less book value = gain on exchange \$14,000 - 12,000 = \$2,000 gain Fair value of old tractor + cash given = Initial value of new tractor \$14,000 + 20,000 = \$34,000 Journal entry (not required): New tractor (\$14,000 + 20,000) ........................................ 34,000 Accumulated depreciation - old asset (account balance) ... 16,000 Cash ......................................................................... 20,000 Old tractor (account balance) ........................................ 28,000 Gain (\$14,000 – 12,000) .............................................. 2,000

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Problem 10-8 (continued) Case B. Requirement 1 Fair value less book value = gain on exchange \$700,000 - 500,000 = \$200,000 gain Fair value of old land + cash given = Initial value of new land \$700,000 + 50,000 = \$750,000 Journal entry (not required): New land (\$700,000 + 50,000) .......................................... 750,000 Cash ......................................................................... 50,000 Old land (account balance) ........................................... 500,000 Gain (\$700,000 – 200,000) ........................................... 200,000 Requirement 2 Book value less fair value = loss on exchange \$500,000 - 400,000 = \$100,000 loss Fair value of old land + cash given = Initial value of new land \$400,000 + 50,000 = \$450,000
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