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The Bronco Corporation exchanged land for equipment. The land had a book value of $126,000 and a fair value of $162,000. Bronco paid the owner of the equipment $16,000 to complete the exchange which has commercial substance. Required: 1. What is the fair value of the equipment

Respuesta :

Zviko

Answer:

$178,000

Explanation:

When a transaction has commercial substance :

Fair value of Asset = Fair Value of Asset given up + Cash paid

therefore,

Fair value of the equipment = $162,000 + $16,000

                                              = $178,000

thus,

the fair value of the equipment is $178,000