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27 October, 21:34

Bloomington Inc. exchanged land for equipment and $2,600 in cash. The book value and the fair value of the land were $104,600 and $88,900, respectively. Bloomington would record equipment and a gain / (loss) of: Equipment Gain / (loss) Multiple Choice $86,300 $2,600. $104,600 $ (2,600). $86,300 $ (15,700). All of these answer choices are incorrect.

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Answers (2)
  1. 27 October, 22:48
    0
    Bloomington will record $86,300 gain and loss of ($15,700)

    Explanation:

    So first we state terms:

    Cash = $2,600

    Fair value of land = $88,900

    Book value of land = $104,600

    Since land was exchanged for cash and equipment

    Land = Cash + Equipment

    Land - Cash = Equipment

    Note: When disposing of land it is done at the fair value price

    $88,900 - $2,600 = Equipment

    $86,300 = Equipment

    To get the loss on sale of the land = (Book value) - (Fair value)

    Loss = 104,600 - 88,900

    = $15,700

    Thus Bloomington will record $86,300 gain and loss of ($15,700)
  2. 28 October, 00:17
    0
    The answer is $86,300 $ (15,700)

    Explanation:

    The correct answer is:

    Equipment would be equal to fair value minus the cash = $88,900 - $2,600 = $86,300

    Loss would be equal to fair value minus book value = $88,900 - $104,600=

    ($15,700)

    So the record would be =

    Land $104,600

    Equipment $86,300

    Cash $2,600

    Loss $15,700
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