Use the Following Information for Questions
Two Independent Companies

question 20

Multiple Choice

Use the following information for questions
Two independent companies, Mintz Co.and Pine Co., are in the home building business.Each owns a tract of land held for development, but each would prefer to build on the other's land.They agree to exchange their land.An appraiser was hired, and from her report and the companies' records, the following information was obtained: $$\begin{array} { l r r } & \text { Mintz's Land } & \text { Pine's Land } \\\text { Cost and book value } & \$ 192,000 & { \$ 120,000 }\\\text { Fair value based upon appraisal } & 240,000 & 210,000\end{array}$$ The exchange was made, and based on the difference in appraised fair values, Pine paid $30,000 to Mintz.The exchange lacked commercial substance.
-The new land should be recorded on Mintz's books at

• A)$168,000.
• B)$192,000.
• C)$210,000.
• D)$240,000.

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Definitions:

Net Profit Margin

A financial metric expressing the percentage of revenue that remains as profit after all operating and non-operating expenses have been deducted.

Gross Margin

The difference between revenue and cost of goods sold, which serves as a measure of a company’s manufacturing and distribution efficiency.

Return On Total Assets

A financial ratio that measures the profitability of a company relative to its total assets, indicating how efficiently a company uses its assets to generate profits.

Return On Equity

A metric that gauges the effectiveness of a firm in utilizing investments to drive earnings growth, determined by dividing net income by shareholders' equity.