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20 April, 01:10

The Bronco Corporation exchanged land for equipment. The land had a book value of $134,000 and a fair value of $178,000. Bronco paid the owner of the equipment $24,000 to complete the exchange which has commercial substance. Required: 1. What is the fair value of the equipment? 2. Prepare the journal entry to record the exchange.

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  1. 20 April, 01:22
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    1. $202,000

    Explanation:

    1. Fair value of the equipment:

    = Land Fair Value + Additional cash paid for Equipment

    = $178,000 + $24,000

    = $202,000

    2. The journal entry is as follows:

    Equipment A/c Dr. $202,000

    To Land $134,000

    To cash $24,000

    To Gain in Asset Exchange $44,000

    (To record the exchange)
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