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Ans. | Account Titles and Explanation | Debit | Credit | ||||
New truck | $3,300 | ||||||
Accumulated depreciation | $15,500 | ||||||
Loss on exchange | $3,700 | ||||||
Old truck | $22,500 | ||||||
(To record Truck exchanged on loss) | |||||||
*Book value of old truck = Cost of truck - Accumulated depreciation | |||||||
$22,500 - $15,500 = $7,000 | |||||||
*Loss on exchange = Book value of truck - Fair value of truck | |||||||
$7,000 - $3,300 | |||||||
$3,700 | |||||||
Ans. | Account Titles and Explanation | Debit | Credit | ||||
New truck | $3,300 | ||||||
Accumulated depreciation | $8,000 | ||||||
Old truck | $10,000 | ||||||
Gain on exchange | $1,300 | ||||||
(To record Truck exchanged on gain) | |||||||
*Book value of old truck = Cost of truck - Accumulated depreciation | |||||||
$10,000 - $8,000 = $2,000 | |||||||
*Gain on exchange = Fair value of truck - Book value of truck | |||||||
$3,300 - $2,000 | |||||||
$1,300 | |||||||
Fair value > Book value = Gain on exchange | |||||||
Fair value < Book value = Loss on exchange | |||||||
Fair value = Book value = No profit no loss | |||||||
Splish Brothers’s Delivery Company and Overland’s Express Delivery exchanged delivery trucks on January 1, 2019. Splish...
Oriole Company exchanged equipment used in its manufacturing operations plus $3,300 in cash for similar equipment used in the operations of Waterway Company. The following information pertains to the exchange. Oriole Waterway Co. Co. $30,800 $30,800 Equipment (cost) 20,900 11,000 Accumulated depreciation Fair value of equipment 17,050 13,750 Cash given up 3,300 Prepare the journal entries to record the exchange on the books of both companies. Assume that the exchange lacks commercial substance. (Credit account titles are automatically indented when...
Exercise 9-06 Blossom Company purchased a delivery truck for $32,000 on July 1, 2022. The truck has an expected salvage value of $4,000, and is expected to be driven 100,000 miles over its estimated useful life of 8 years. Actual miles driven were 15,000 in 2022 and 12,000 in 2023. Blossom uses the straight-line method of depreciation. We were unable to transcribe this imageWe were unable to transcribe this imageExercise 9-06 Blossom Company purchased a delivery truck for $32,000 on...
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