B is corrent. Per ASC Topic 845, if the cash flows of the two assets are not significantly different, the transaction lacks commercial substance and is recorded at book value. Therefore, the land acquired is recorded at total of the cash paid ($50,000) and the book value of the land surrendered ($100,000), or $150,000. The economic gain of $40,000 ($140,000 market value less $100,000 book value) is not recognized. The journal entry is
A is incorrect. Per ASC Topic 845, if the cash flows of the two assets are not significantly different, the transaction lacks commercial substance and is recorded at book value. Therefore, the land acquired is recorded at total of the cash paid ($50,000) and the book value of the land surrendered ($100,000), or $150,000. The economic gain of $40,000 ($140,000 market value less $100,000 book value) is not recognized. The journal entry is
A is incorrect. Per ASC Topic 845, if the cash flows of the two assets are not significantly different, the transaction lacks commercial substance and is recorded at book value. Therefore, the land acquired is recorded at total of the cash paid ($50,000) and the book value of the land surrendered ($100,000), or $150,000. The economic gain of $40,000 ($140,000 market value less $100,000 book value) is not recognized. The journal entry is
A is incorrect. Per ASC Topic 845, if the cash flows of the two assets are not significantly different, the transaction lacks commercial substance and is recorded at book value. Therefore, the land acquired is recorded at total of the cash paid ($50,000) and the book value of the land surrendered ($100,000), or $150,000. The economic gain of $40,000 ($140,000 market value less $100,000 book value) is not recognized. The journal entry is
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