The Bronco Corporation exchanged land for equipment. The land had a book value of $125,000 and a fair value of $160,000. Bronco

Question

3 years ago

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The Bronco Corporation exchanged land for equipment. The land had a book value of $125,000 and a fair value of $160,000. Bronco

received $15,000 from the owner of the equipment to complete the exchange which has commercial substance. Required: 1. What is the fair value of the equipment

Business

1 answer:

Pavlova-9 [17] · Answer 1 · 2022-09-24T06:03:42+03:00

Answer:

The Bronco Corporation

The fair value of the equipment is:

= $145,000.

Explanation:

a) Data and Calculations:

Book value of land = $125,000

Fair value of the land = $160,000

Amount received from the equipment owner in exchange = $15,000

Fair value of the equipment = $145,000 ($160,000 - $15,000)

b) This simply means that the equipment is worth less than the land which is exchanged between Bronco and the equipment owner.