Question

could you please answer it? thx

Question 1 Skysong Corporation wishes to exchange a machine used in its operations. Skysong has received the following offers from other companies in the industry 1. Concord Company offered to exchange a similar machine plus $32,660. (The exchange has commercial substance for both parties.) 2. Marigold Company offered to exchange a similar machine. (The exchange lacks commercial substance for both parties.) 3. Swifty Company offered to exchange a similar machine, but wanted $4,260 in addition to Skysong's machine. (The exchange has commercial substance for both parties.) In addition, Skysong contacted Nash Corporation, a dealer in machines. To obtain a new machine, Skysong must pay $132,060 in addition to trading in its old machine kysong Concord Marigold Swift $227,200 $170,400 $215,840 $227,200 $184,600 Nash Machine cost Accumulated depreciation Fair value 85,200 63,900 100,820106,500 97,980 130,640134,900 262,700 0 130,640 For each of the four independent situations, prepare the journal entries to record the exchange on the books of each company. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) No. Account Titles and Explanation 1. Skysong Corporation Debit Credit

Answer 1

Skysong Corporation: Exchange transactions with other parties. Having commercial substance and lack of commercial substance.

Given all the journal entries for both the parties in all four scenarios.

Please hit LIKE button if this helped. For any further explanation, please put your query in comment, will get back to you. Part 1: Has Commercial Substance Account Debit Credit Remark for Reference Skysong: Cash Machinery Accumulated Depreciation Loss on Disposal of Machine 32,660 S 97,980 $ 85,200 S 11,360 Cash paid to Skysong Fair value of Machine given to Skysong Accumulated Dep of Skysong old Machine Working-1a Machinery (to record exchange of machinery) 227,200 Cost of Skysong old Machine Concord Machinery Accumulated Depreciation Loss on Disposal of Machine $130,640 S 63,900 $ 8,520 Fair Value of Skysong Machine Accumulated Dep of Concord Machine Working-1b Cash Machinery o record exchonge of machinery) 32,660 Cash paid to Skysong 170,400 Cost of Concord Machine Working-1a: $130,640 $142,000 Fair Value of Skysong Machinery Book Value of Skysong Machinery 227200-85200 Loss on Dis 11,360 Working-1b Fair Value of Concord Machinery Book Value of Concord Machinery 170400-63900 Loss on Disposal $97,980 $106,500 S -8,520 Part 2: Lacs commercial substance: Account Debit Credit Remark for Reference Skysong Machinery Accumulated Depreciation Loss on Disposal of Machine 130,640 $ 85,200 S 11,360 Fair value of Machine given to Skysong Accumulated Dep of Working-2a Skysong old Machine Machinery record exchonge of machinery) 227,200 Cost of Skysong old Machine Marigold Machinery Accumulated Depreciation 115,020 $100,820 Plug in Accumulated Dep of Marigold Machine Machinery 215,840 Cost of Marigold Machine to record exchange of machinery Since n o commercial substance, no gain will be recorded) $130,640 $142,000 Fair Value of Skysong Machinery Book Value of Skysong Machinery 227200-85200 Loss on Dis 11,360 Working-2b Fair Value of Marigold Machinery Book Value $130,640 $115,020 Gain 15,620 Since no commercial substance, no gain will be recorded)

Part 3: Has Commercial Substance Account Debit Credit Remark for Reference Skysong: Machinery Accumulated Depreciation Loss on Disposal of Machine $134,900 85,200 S 11,360 Fair value of Machine given to Skysong Accumulated Dep of Skysong old Machine Working-3a Cash Machinery $ 4,260 given in question 227,200 Cost of Skysong old Machine (to record exchange of machinery) Sw Machinery Accumulated Depreciation Cash $130,640 $106,500 S 4,260 Fair Value of Skysong Machine Accumulated Dep of Swifty Machine given in question Gain on Disposal of Machine Machinery 14,200 Working-3b 227,200 Cost of Swifty Machine (to record exchonge of machinery) Working-3a 130,640 $142,000 Fair Value of Skysong Machinery Book Value of Skysong Machinery 227200-85200 Loss on Disposal S -11,360 Working-3b $134,900 120,700 Fair Value of Swifty Machine Book Value of Swifty Machine 227200-106500 Loss on Disposal $ 14,200 Part 4This is excahnge with dealer hence dealer will record it as Sale Revenue and reduce inventory and book COGS Account Debit Credit Remark for Reference Skysong Machine Accumulated Depreciation Loss on Disposal of Machine 262,700 85,200 11,360 Fair value of Machine given to Skysong Accumulated Dep of Skysong old Machine Working-4a Cash Machinery $132,060 given in question 227,200 Cost of Skysong old Machine (to record exchange of machinery) Nash $132,060 $130,640 Cash given in question Fair Value of Skysong Machine Inventory Sales Revenue 262,700 Sale value for Nash Corporation as he is dealer Cost of Goods Sold 184,600 Cost of Machiner sold as he is dealer Inventory 184,600 Inventory will be reduced on sale (to record exchange of machinery) Working-4a 130,640 142,000 Fair Value of Skysong Machinery Book Value of Skysong Machinery 227200-85200 Loss on Disposal $-11,360