Question - Chatham Acres Inc. would like to purchase new farm machinery with a fair value of $215,000.
On November 1, 2017, the company purchases the machinery for $40,000 cash and also transfers land it owns but no longer uses over to the seller. The land has a fair market value of $175,000 and a book value of $120,000. The exchange has commercial substance.
Required: Prepare the journal entry Chatham Farms should make to record the exchange of land and cash for the machine.