Question

Question 1 Moore Corporation follows a policy of a 10% depreciation charge per year on machinery and a 5% depreciation charge per year on buildings. The following transactions occurred in 2018: March 31, 2018 - Negotiations which began in 2017 were completed and building purchased 11/09 (depreciation has been properly charged through December 31, 2017 at a cost of $5.536,000 with a fair value of $3.940,000 was exchanged for a second building which also had a fal value of $3.000.000. The exchange had no commercial substance. Both parcels of land on which the buildings were located were equal in value, and had a fair value equal to book value. June 30, 2018 - Machinery with a cost of $720 000 and accumulated detection through any of 500,000 was exchanged with $ 7,000 cash for a parcel of land with a falva 5693.000. The exchange had commercial substance Prepare all appropriate Journal entries for More Corporation for the above dates. (Credit account titles are automatically indented when the amount is een an d manually.) Act ies and Explanation Date 1/31/18 (To record depreciation) 3/1/18 (to record exchange of buildings 6/30/16

Answer 1

Journal Entries:

Date	Account Titles and Explanation	Debit	Credit
3/31/18.	Depreciation Expense - Buildings ($6,536,000*5/100*3/12 months)	$81,700
	Accumulated Depreciation		$81,700
	(To record the depreciation on buildings)
3/31/18.	New Buildings	$3,944,000
	Loss on Exchange of Old Buildings ($6,536,000 - $3,944,000)	$2,592,000
	Old Buildings		$6,536,000
	(To record the exchange of old buildings with new buildings)
6/30/18.	Depreciation Expense - Machinery ($720,000*10/100*6/12 months)	$36,000
	Accumulated Depreciation		$36,000
	(To record the depreciation on machinery)
6/30/18.	Cash	$457,000
	Land	$693,000
	Old Machinery		$720,000
	Loss on Exchange of Old Machinery ($457,000 + $693,000 - $720,000)		$430,000
	(To record the exchange of old machinery for parcel of land and cash)