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3 years ago

Case A.

Business

1 answer:

MA_775_DIABLO [31]3 years ago

3 0

Answer:

Kapono Farms

Case A:

a. The loss that Kapono would recognize on the exchange is:

= $6,600.

The initial value of the new tractor is:

= $38,900.

b. The gain that Kapono would recognize on the exchange is:

= $6,500.

The initial value of the new tractor, if cash payment of $29,000 was made, would be:

= $52,000.

Case B:

c. The amount of gain that Kapono would recognize on the exchange is:

= $245,000.

The initial value of the new land is:

= $790,000.

d. The amount of the loss that Kapono would recognize on the exchange of land is:

= $109,000.

The initial value of the new land is $495,000, if payment of $59,000 is made.

e. If the exchange lacked commercial substance, there is no gain or loss.

The initial value of the new land would be the book value of the old farmland, which is:

= $545,000.

Explanation:

a) Data and Calculations:

Book value of old tractor = $16,500 $16,500

Fair value of old tractor = 9,900 23,000

Loss from the exchange = $6,600 -6,500

Value of new tractor

Fair value of old tractor = $9,900 $23,000

Cash payment to complete 29,000 29,000

Value of new tractor $38,900 $52,000

Case B:

Book value of farmland = $545,000 $545,000

Fair value of farmland = 790,000 436,000

Gain from exchange = $245,000 $109,000

Value of New Farmland:

Fair value of old farmland $790,000 $436,000

Cash payment to complete 59,000 59,000

Value of new farmland = $849,000 $495,000

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The amount of depreciation expense for the years ended December 31, 2012, 2013, 2014, and 2015, for Layton Company is determined as follows:

<h3>(a) the straight-line method:</h3>

2012: $33,600

2013: $33,600

2014: $33,600

2015: $0

<h3>(b) the units-of-output method:</h3>

2012: $11,340 (1,350 x $8.40)

2013: $35,280 (4,200 x $8.40)

2014: $30,660 (3,650 x $8.40)

2015: $23,520 (2,800 x $8.40)

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2013: $24,002 ($36,007 x 0.6666)

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2015: $0

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Useful life = 3 years

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Residual value = $7,200

Depreciable amount = $100,800 ($108,000 - $7,200)

Straight-line depreciation rate = $33,600 per year ($100,800/3)

Units-of-output method rate = $8.40 per hour ($100,800/12,000)

Double-declining-balance method rate = 66.6666 (100/3)

Thus, the depreciation expenses for the years ended December 31, 2012, 2013, 2014, and 2015, for Layton Company have been determined using (a) the straight-line method, (b) the units-of-output method, and (c) the double-declining-balance method.

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