Ralph Company Exchanged a Machine for Some Land $\$ 4,700$

question 49

Essay

Ralph Company exchanged a machine for some land.The machine had cost $15, 000, was 70% depreciated, and could be sold for $4, 100.Calvin paid $600 in addition to giving up the machine.
Required:
a. Compute the amount at which the land should be recorded.
b. Assume, instead, that Ralph exchanged the machine for a new, more efficient machine with a fair value of $\$ 4,700$ , while still paying $\$ 600$ as before. Compute the gain or loss that would be recorded on the sale of the old machine by Ralph

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Definitions:

International Conversion Rate

The international conversion rate is the exchange rate at which one currency can be converted into another for international transactions.

Currency Rate

The value of one currency expressed in terms of another currency; also known as the exchange rate.

Investee Company

A company in which an investor holds a minority stake, without controlling interest or influence.

Controlling Interest

An ownership interest in a company that gives the holder a majority of voting rights, often allowing for control over the company’s policies and decisions.