Use the following information for questions.
Two independent companies, Hager Co.and Shaw Co., 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.They agree to exchange their land.An appraiser was hired, and from her report and the companies' records, the following information was obtained:
The exchange was made, and based on the difference in appraised fair values, Shaw paid $10,000 to Hager.The exchange has commercial substance.
-The new land should be recorded on Shaw's books at

Question

Use the following information for questions.
Two independent companies, Hager Co.and Shaw Co., 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.They agree to exchange their land.An appraiser was hired, and from her report and the companies' records, the following information was obtained:  
The exchange was made, and based on the difference in appraised fair values, Shaw paid $10,000 to Hager.The exchange has commercial substance.
-The new land should be recorded on Shaw's books at

Quizplus · Accepted Answer

The new land should be recorded on Shaw's books at the fair value of the land given up plus the cash paid. The fair value of the land given up by Shaw was $100,000 and the cash paid was $10,000, so the total cost of the new land is $110,000. However, based on the appraised fair values, the new land is actually worth $220,000. Therefore, the new land should be recorded on Shaw's books at $220,000.

Use the Following Information for Questions