6) In exchange, the Stars traded a whirlpool to the Rangers for a smaller 2002. The...

6) In exchange, the Stars traded a whirlpool to the Rangers for a smaller 2002. The following information is provided to you:

Stars
Cost of a whirlpool and related accumulated depreciation (A/D). $850,000 (cost) and $640,00

Cash received from the Rangers $37,000

The fair value of Star’s whirlpool $270,000

Rangers
Cost of whirlpool and related accumulated depreciation (A/D) $ 930,000 (cost) and $ 630,000

Cash paid to the Stars $37,000
The fair value of Ranger’s whirlpool $ ?

Assume a fair exchange (both parties agreed as to the fair values) and lack of commercial substance.

What was the fair value of the Rangers’ whirlpool at the time of the exchange?
What is the amount of the gain (loss) on exchange recognized by the Rangers? (identify whether this is a gain or a loss).
How much Boot did the Rangers receive in this exchange?
How much is the total (implied) gain on the exchange for the Stars?
What percentage of this total implied Gain (in iv above) will the Stars recognize?

Solutions

Expert Solution

ekkarill92 answered 1 year ago

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