Derivatives...yes no maybe?!?

Submitted our AFA project today. All projects finally submitted. Phew. Time to mug.

Reviewing FRS 39 today (tmrw and the next few days) and i tried to link it back to 'real life' situations. Then i thought of my Monopoly game with my cousins a few weeks ago. There was one transaction that i think i'm not sure how to account for.

The transaction

I want Jolyn's Pentonville Road (cost 120) and she wants my Leicester Square (cost 260). I have the other 2 light blue property so i'm keen to get my hands on Pentonville to form a set so as to built hotels for my lovely cousins to stay in. However Jolyn is NOT willing to part with it, cuz i think she only has no money on hand to develop her properties (even if she does form a complete set).

Meanwhile i have a hotel built on Vine Street ($2000 per stay). So i gave my cousin the deal of the century, she get to have Leicester AND one free stay at Vine street in exchange for Pentonville Road.  She agreed. How should should Jolyn account for her property?

She gave up Pentonville and gained 1 property and a free stay.

I think the journal entries would involve the following

Dr Free Stay

Dr Leicester

Cr Pentoville (at historical cost of $120)

Cr Gain on sale???

Now, should Leicester be valued at MY historical cost of $260, or at a exchange price of $XXX?

How should the free stay be valued? Is it a derivative? I think it is the present value of $2000 discounted at some rate given some probability distribution. But i don't think it fits the definition of either options or forwards. I can't even think of the payoff function from Jolyn's point of view...

Would there be the credit Gain on Sale? is it a residual after we value 'free stay', 'leicester' less 'pentoville'? If the 'free stay' is indeed a derivatives, is it governed by FRS 39?

by the way, Jolyn is Sec One. So i think she fully meets the 'knowledgeable and willing seller + arms length' criteria. I'm not a bully k?

ok. far too many question marks. Please tag to let me know what you think. (other than telling me you think i streeessssseeddddd. hahaha). 

Oh ya, thanks to cheeguan, i gotta clear some more CIP hours during the christmas caroling. yippee!