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Determine the balance sheet amount

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Question - In 2017, Company A and Company B exchanged parcels of farmland. To complete the exchange, Company B paid Company A $150,000 cash. Information about the exchange is included below

Company A's Land Company B's Land

Fair Market Value $500,000 $350,000

Original Cost $400,000 $190,000

Assuming commercial substance, provide the journal entry Company B would make to reflect the exchange.  

Assuming no commercial substance, determine the amount of the gain (loss) recognized by Company A for the exchange on its 2017 income statement.

Assuming no commercial substance, determine the balance sheet amount at which Company A will report the land it received on the date of the exchange.   

In general, how does a company determine if an exchange has commercial substance?

Reference no: EM131723442

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