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On July 1, 2004, Balt Co. exchanged a truck for 25 shares of Ace
Corp.'s common stock. Assume commercial substance.On that
date, the truck's carrying amount was $2,500, and its fair value
was $3,000. Also, the book value of Ace's stock was $60 per share.
On December 31, 2004, Ace had 250 shares of common stock
outstanding and its book value per share was $50. What amount
should Balt report in its December 31, 2004, balance sheet as
investment in Ace?
Question 13
On December 31, 2004, a building owned by Carr, Inc. was
destroyed by fire. Carr paid $12,000 for removal and cleanup
costs. The building had a book value of $250,000 and a fair value
of $280,000 on December 31, 2004. What amount should Carr use
to determine the gain or loss on this involuntary conversion?
Question 14
On July 1, 2005, Glen Corp. leased a new machine from Ryan
Corp. The lease contains the following information: No bargain
purchase option is provided, and the machine reverts to Ryan
when the lease expires. What amount should Glen record as a
capitalized leased asset at inception of the lease?
Question 15
Scott Co. exchanged nonmonetary assets with Dale Co. No cash
was exchanged. There is commercial substance to the exchange.
The carrying amount of the asset surrendered by Scott exceeded
both the fair value of the asset received and Dale's carrying
amount of that asset. Scott should recognize the difference
between the carrying amount of the asset it surrendered and
Question 16