Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. two independent companies, e.t. barwick and olivet

Two independent companies, E.T. Barwick and Olivetti Underwood, are in the home building business. Each...

50.1K

Verified Solution

Question

Accounting

Two independent companies, E.T. Barwick and Olivetti Underwood, are in the home building business. Each owns a tract of land held for development, but each would prefer to build on the other's land. Each company agreed to exchange its land. An appraiser was hired, and from her report and each company's records, the following information was obtained:

Cost Book Value Fair Value
E.T. Barwicks land 117,800 117,800 161,900
Olivetti Underwoods land 97,100 97,100 134,300

The exchange was made, and based on the difference in appraised fair values, Olivetti Underwood paid $27,600 to E.T. Barwick. The exchange lacked commercial substance.

For financial reporting purposes, what amount should E.T. Barwick record as its cost for the asset received?

For financial reporting purposes, Olivetti Underwood should recognize a gain on this exchange of?

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students