Hello,

This question is posted again because the tutor ran out of time.

My question is below.. I will include what I think because it was flagged before but I think the whole question must be posted because otherwise the tutor will not understand all the details. I have tried the problem myself so I am doing my own work. I only want to verify that I did it correctly. I will post my thoughts in the comments. Thanks.

B. Kennedy Company exchanged a warehouse with an appraised value of $1,260,000, a recorded cost of $1,800,000, and Accumulated Depreciation of $900,000 with Stark Corporation for an office building Stark owns. The office building has an appraised value of $1,224,000, a recorded cost of $2,160,000, and Accumulated Depreciation of $1,080,000. Stark also gave Kennedy $36,000 in the exchange.

REQUIRED:

Prepare the entries on both companies' books assuming that the transaction is considered to have commercial substance.

If the transaction has commercial substance, then the fair value is used as the basis

Prepare the entries on both companies' books assuming that the transaction is considered not to have commercial substance.