Glen Inc
Subject:AccountingPrice:2.87 Bought7
Glen Inc. and Armstrong Co. have an exchange with no commercial substance. The asset given up by Glen Inc. has a book value of $39,020. The asset given up by Armstrong Co. has a book value of $61,037 and a fair value of $83,951. Boot of $5,868 is received by Armstrong Co. What amount of gain is recognized by Armstrong?
Armstrong has a gain on the exchange. The fair value of their asset is greater than the book value. The amount of gain to be recognized is:
(Fair Value - book value) x cash received/(cash + fair value of Glenn's asset)
Fair value of Glenn's asset = (fair value of Armstrong's - cash paid).
The fair value of assets received = fair value of assets given up.
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Answer:
| Amount of Gain = (Fair Value - book value) x cash received/(cash + fair value of Glenn's asset) | |
| Fair value of Glenn's asset = (fair value of Armstrong's - cash paid). | |
| The fair value of assets received = fair value of assets given up. | |
| Amount of Gain =((83951-61037)*5868)/(5868+78083) = | $1,601.64 |
| Fair Valu eof Glenn's Asset =$83951- $5868 = | $78,083.00 |
| The fair value of Assets Received = $83951 | |
