 |
|
| Browse | Ask | Answer | Search | Join/Login |
|
|
||||
|
fair market value of the exchange item
this question is about the a company that had bought a land costing 30,000 and decided to exchange it for something that was interesting to them, they got the land aprraised and it currently worth 72,000 the company paid in cash the independent apraisal a sum of 14,000 the question is how much is the fair value of the interesting item that is received by the company
so I think since in an exchange situation what is being exhanged should be of equal price or value to the item being exhanged it should be 30,000+14,000=44,000 is this correct or is there any formular that is used to calculate the fair market value? thank you |
||||
|
||||
|
In order to obtain the "interesting" item the company is willing to give up land worth 72K. This implies that the company feels that the "interesting" asset ("IA") is worth at least 72K.
Now look at it through the other party's eyes. To them, the IA is worth no more than 72K (it's logical to assume that they were aware of the appraisal's results). Otherwise, they wouldn't agree to the swap. This argues pretty strongly that the IA has a FMV in the very near vicinity of 72K. BTW, the appraisal fee doesn't factor in, although some might argue it should. It was an expense of "finding out" the land's value. After having been informed of the land's value, the company's sole decision is whether to exchange land worth 72K for the IA. The appraisal fee is a sunk cost, irrelevant to the "keep the land or swap" decision. |
||||
| Question Tools | Search this Question |
Add your answer here.
Check out some similar questions!
I'm needing to establish the fair market value for a house I have on my property. My realtor states he can't do this as it was moved onto my land which already had a house on it, and the house in question has no land allocated with it. Other realtors aren't willing to assist me because I'm...
My mother gave me a quit deed to her house (which is on my land with my own house) in October 2007. Now I'm trying to sell my entire property and found out that the IRS will want the Fair Market Value from that date on my mom's house whenever I sell and file taxes. My realtor has told me that's...
I have 9 properties and I recently received 3 1099-A stating a balance amount due on the loan . For example, one of my condos had a balance of $130,000 and the FMV (Box 4) stated $145,000. I have County Records showing the Assessed Value of the property is $30,000. Question: Why is the bank...
I have to do a practice set in accounting, when I got to this transaction it stumped me... What do I debit and credit? How much for? Purchased Land and an office building for $145,000, of which $100,800 was attributable to the fair market value of the building. A $55,000 cash down payment was...
View more questions Search
|
