Question

chio 3 of Dware Com Question 3: Non-monetary exchange. Rogers Co. had a sheet metal culter that cost $96.000 on January 5, 2010. This old cutter had an estimated life of ten years and a salvage value o ST6,000 and Accumulated depreciation of $42,000 On January 1, 2015, the old cutter is exchanged for a new cutter with a fair value of $48,000. The exchange had commercial substance. Rogers also paid $12,000 cash. Assume that the last fiscal period ended on December 31, 2014, and that straight-line depreciation is used. bod t Instructions (a) Show the calculations for the cost of this exchange and calculation of the amount of the gain or loss to be recognized by Rogers Co. New equip cose= 12,000 + 48,000 = 60,000 Gain/loss= ( 961000-471000) = 48,000 = booth 5 47.00 ade (b) Prepare all entries that are necessary on April 3, 2015. D = new equip 601000) P = acc, dep thood D - loss cool c= old eau p 96,000 cs Cash 12,000

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Answer 1

Merge & Orte Coronel for formatting Neutral Chack Cell Solution a. Cost of Sheet metal cutter (Given) b. Acumulated Depreciation (Given) C Book Value fa b) d. Fair Value (5480001$12000) e. Gain of exchange (d-c) $96000 12000 54000 SG0000 6000 So we have to recognise the gain for the year (6000*1/5) $1200 alla sala Journal Entries a. Depreciation A/c Dr tu Accumulated Depreciation a/c $2000 $2000 Working Note Depreciation (Straight line) Value of machine $96000 Salvage $16000 Estimate life 10 years depreciation 96000-16000/10 -8000 depreciation for yearly based on 4 years=8000/4-2000 b. Accumulated Depreciation a/c dr Machinary a/cdr Cash a/cdr to Machinary ac tu Gain on exchange a/c S42000 $43200 $12000 $96000 $1200 AB Sheet1 Sheet2 Sheet3 O Start your search