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Summer Exchanges an Office Building Used in Her Business for Another

question 1639

Essay

Summer exchanges an office building used in her business for another office building. Summer's office building FMV of $250,000 (basis of $180,000). The FMV of the new building is $300,000, and it is subject to a mortgage of $ which is assumed by Summer. Summer also pays the other party $40,000 cash.
a. What is the amount of gain realized by Summer?
b. What is the amount of gain recognized by Summer?
c. What is the basis of the new building to Summer?


Definitions:

AASB 141

An Australian Accounting Standards Board regulation concerning agriculture, guiding the accounting for agricultural activity and assets.

IAS 41

The International Accounting Standard on Agriculture, concerning the accounting for agricultural activity and the management of biological assets and agricultural produce.

Market Value

The current price at which an asset or service can be bought or sold in the market.

Lactation Rate

The rate at which a female mammal produces milk postpartum, often used in agricultural contexts to measure dairy productivity.

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