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6 September, 17:59

Horton Stores exchanged land and cash of $5,300 for similar land. The book value and the fair value of the land were $88,400 and $100,800, respectively. Assuming that the exchange lacks commercial substance, Horton would record land-new and a gain / (loss) of: Land Gain / (loss) a. $ 106,100 $ 0 b. $ 106,100 $ 12,400 c. 93700 $ 0 d. $ 93,700 $ 12,400

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  1. 6 September, 18:21
    0
    c. - 93,700 / / 0

    Explanation:

    As it lacks commercial substance neither Horton nor the other parti will recognize gain/loss on the trade.

    Horton will recognize the new land for the value traded without a gain/loss entry:

    Land 93,700 (88,400 + 5,300 cash) debit

    Cash 5,300 credit

    Land 88,400 credit

    --to record trade of land without commercial subtance--
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Home » Business » Horton Stores exchanged land and cash of $5,300 for similar land. The book value and the fair value of the land were $88,400 and $100,800, respectively.
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