Exchange of Assets
Response to the following problem:
Minor Baseball Company had a player contract with Doe that was recorded in its accounting records at $145,000. Better Baseball Company had a player contract with Smith that was recorded in its accounting records at $140,000. Minor traded Doe to Better for Smith by exchanging each player's contract. The fair value of each contract was $150,000.
Required:
What amounts should each company show in its accounting records for the exchange of player contracts?