Question - Smith and Jones each own tracts of land. Because of the location of their current operations, each would prefer to have the other's land. Smith and Jones agree to exchange tracts. Smith pays Jones $36,000 based upon the following data.
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Smith Land
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Jones Land
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Original Cost
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$270,000
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$280,000
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Appraisal fair value at date of exchange
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$300,000
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$264,000
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Instructions
(a) Prepare the journal entry to record the exchange on Smith's books, assuming the transaction has commercial substance.
(b) Prepare the journal entry to record the exchange on Smith's books, assuming the transaction does not have commercial substance.
(c) Prepare the journal entry to record the exchange on Jones's books, assuming the transaction has commercial substance.
(d) Prepare the journal entry to record the exchange on Jones's books, assuming the transaction does not have commercial substance.