Problem NO: 26

Prater Inc. enters into an exchange in which it gives up its warehouse on 10 acres of land and receives a tract of land. A summary of the exchange is

Prater Inc. enters into an exchange in which it gives up its warehouse on 10 acres of land and receives a tract of land. A summary of the exchange is as follows:

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Transferred           FMV Original       Basis Accumulated Depreciation

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Warehouse $300,000 $225,000 $45,000

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Land50,00050,000

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Mortgage on warehouse30,000

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Cash20,00020,000

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Assets Received          FMV

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Land $340,000

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What are Prater’s realized and recognized gain on the exchange and its basis in the assets it received in the exchange?

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