[The following information applies to the questions displayed below.] Case A. Kapono Farms exchanged an old...

Question:

[The following information applies to the questions displayed below.]

Case A. Kapono Farms exchanged an old tractor for a newer model. The old tractor had a book value of $17,000 (original cost of$38,000 less accumulated depreciation of $21,000) and a fair value of$10,000. Kapono paid $30,000 cash to complete the exchange. The exchange has commercial substance. Case B. Kapono Farms exchanged 100 acres of farmland for similar land. The farmland given had a book value of$550,000 and a fair value of $800,000. Kapono paid$60,000 cash to complete the exchange. The exchange has commercial substance.

Assume the fair value of the old tractor is $24,000 instead of$10,000. What is the amount of gain or loss that Kapono would recognize on the exchange? What is the initial value of the new tractor?

Assume the fair value of the old tractor given is $24,000 instead of$10,000. What is the amount of gain or loss that Kapono would recognize on the exchange? What is the initial value of the new tractor?

 Initial value of new tractor

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