Answer:
Land-new = $105,000 ; $10,000 gain
Explanation:
Given the following :
Exchange fee = land + $5000 cash
Book value of land given up = $90,000
Fair value of land given up = $100,000
The book value refers to the value of the land as stated in the balance sheet of the company, However, the fair value is the market price or value of an asset, which is also the price a buyer will pay for such asset.
Therefore, since the fair value is greater than the book value, that translates into a profit;
Fair value of land - book value of land
$100,000 - $90,000 = $10,000 gain
The land-new = Fair value of old land + the $5000 cash received
Land-new = $100,000 + $5,000 = $105,000