Reference no: EM13999231
Case A. Kapono Farms exchanged an old tractor for a newer model. The old tractor had a book value of $12,000 (original cost of $28,000 less accumulated depreciation of $16,000) and a fair value of $9,000. Kapono paid $20,000 cash to complete the exchange. The exchange has commercial substance.
Required:
1. What is the amount of gain or loss that Kapono would recognize on the exchange? What is the initial value of the new tractor?
2. Repeat requirement 1 assuming that the fair value of the old tractor is $14,000 instead of $9,000.
Case B. Kapono Farms exchanged 100 acres of farmland for similar land. The farmland given had a book value of $500,000 and a fair value of $700,000. Kapono paid $50,000 cash to complete the exchange. The exchange has commercial substance.
Required:
1. What is the amount of gain or loss that Kapono would recognize on the exchange? What is the initial value of the new land?
2. Repeat requirement 1 assuming that the fair value of the farmland given is $400,000 instead of $700,000.
3. Repeat requirement 1 assuming that the exchange lacked commercial substance.
|
Capital and labor causes output to increase
: If a 10 percent increase in both capital and labor causes output to increase by less than 10 percent, the production function is said to exhibit decreasing returns to scale. If it causes output to increase by more than 10 percent, the production func..
|
|
Estimate of the result of increase in autonomous expenditure
: The Keynesian model and the AD/AS model are similar in many ways and different in many ways. A. What are the characteristics of an economy in which the Keynesian model will provide a good estimate of the result of an increase in autonomous expenditur..
|
|
Economic theories that are germane to provision of services
: Imagine that you are a manager running a unit in a rehabilitation center. Up to this point, your primary population of payers has been elderly patients who come into the center for physical therapy. What potential solutions would you suggest to your ..
|
|
Industrial organization view of market versus resource-based
: Smart Phone Market The smart phone market has been dominated by Apple, but recently the Droid has been able to leverage Google’s information services into market gains while Blackberry, known for its secure business oriented network, has attempted to..
|
|
What is the initial value of the new land
: What is the amount of gain or loss that Kapono would recognize on the exchange? What is the initial value of the new land?
|
|
The various estates in land described
: The various estates in land described by the author of your text in Chapter 3 arose mostly out of the struggle between the English Crown’s need for revenue and the efforts of the holders of the land to avoid taxes. Are these estates useful in this da..
|
|
What is the equilibrium value of price and quantity
: Intermediate Microeconomics -- Assume the market for generic aspirin is perfectly competitive. At equilibrium, the price elasticity of demand for generic aspirin is characterized as ED = − 1/5. Where b is a numerical value, P represents the price of ..
|
|
What is the effective annual rate of return
: An engineer invested $10,000 in the stock market. For the first six years, the average return was 8% annually. For the next four years, the return as 4% annually. What is the value of the account after 10 years? What is the effective annual rate of r..
|
|
Determine the health and direction of our economy
: Explain a/an economic indicator used to determine the health and direction of our economy. Discuss whether the indicator is cyclical or counter cyclical. What are some other indicators of how well the economy is doing not mentioned directly in the te..
|