Salad Express exchanged land it had been holding for future plant expansion for

Question

Salad Express exchanged land it had been holding for future plant expansion for a more suitable parcel of land along distribution routes. Salad Express reported the old land on the previously issued balance sheet at its original cost of $79,000. According to an independent appraisal, the old land currently is worth $150,000. Salad Express paid $23,500 in cash to complete the transaction. 2. Record the exchange. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Required 1. What is the fair value of the new parcel of land received by Salad Express? View transaction list Fair value of the new land Journal entry worksheet Record the exchange of land. Note: Enter debits before credits. Transaction General Journal Debit Credit Record entry Clear entry View general journal

Explanation / Answer

SOLUTION

1. Fair value of the Land-

2. Record the exchange-

Gain on exchange = Land,new - Land, Old - Cash paid to purchase

= $173,500 - $79,000 - $23,500

= $71,000

Particulars Amount ($) Fair value of the old Land 150,000 Add: Cash paid 23,500 Fair value of the new Land 173,500

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