Eagle Company Owns a Tract of Land That It Purchased

question 33

Multiple Choice

Eagle Company owns a tract of land that it purchased in 2008 for $200,000. The land is held as a future plant site and has a fair market value of $280,000 on July 1, 2011. Hall Company also owns a tract of land held as a future plant site. Hall paid $360,000 for the land in 2010 and the land has a fair market value of $380,000 on July 1, 2011. On this date, Eagle exchanged its land and paid $100,000 cash for the land owned by Hall. The exchange had commercial substance. At what amount should Eagle record the land acquired in the exchange?

• A) $280,000
• B) $300,000
• C) $320,000
• D) $380,000

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Definitions:

Marginal Cost

The cost incurred by producing one additional unit of the product.

Monopolist

A Monopolist is a sole provider of a product or service in a market, facing no competition and having the power to control prices and market supply.

Perfect Price Discrimination

A pricing strategy where a seller charges each buyer their maximum willingness to pay, capturing the entire consumer surplus.

Average Revenue

The revenue a company receives per unit of goods or services sold, calculated by dividing total revenue by the number of units sold.