Kapono farms exchanged 100 acres of farmland for similar land. the farmland given had a book value of $535,000 and a fair value of $770,000. kapono paid $57,000 cash to complete the exchange. the exchange has commercial substance. required: 1. what is the amount of gain or loss that kapono would recognize on the exchange? what is the initial value of the new land? 2. assume the fair value of the farmland given is $428,000 instead of $770,000. what is the amount of gain or loss that kapono would recognize on the exchange? what is the initial value of the new land? 3. assume that the exchange lacked commercial substance. what is the amount of gain or loss that kapono would recognize on the exchange? what is the initial value of the new land?

Secured loans are protected by collateral security. examples: title loans where the borrower uses the car title as collateral security interest rates are lower and repayments are longer therefore risk is low as a collateral security is given as guarantee to the bank in case of failure to pay the loanunsecured loans are not protected by collateral security but it is given on the creditworthiness of the borrower, trusting that she/he will pay on time. examples; payday loans is a short term loan where the borrower lends money from the bank and pays is back when the borrower receives his/her wages.interest rates are high and repayments are shorter. but the risk is high as no collateral security is given as a guarantee to the bank for payment of the loan