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Novak Corporation operates a retail computer store. To improve delivery services to customers, the company purchases four new

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Answer #1

As per the accounting standards fixed asset is acquired at the purchase cost plus any other expdexpe incurred to make it ready for the intended use. In the given case

1.Truck1

Truck 1 a/c.....Dr 39059

To Cash a/c 39059

2.Truck 3

Truck 3 a/c.....Dr 44960

To Inventory a/c 42712

To profit and loss a/c 2248

In the above situation the inventory is exchanged to acquire the Truck.therefore cost of the truck will be the fair market value of the asset acquired and any balance will be considered either gain or loss.

3.Truck 4

Truck 4 a/c.....Dr 39340

To Share capital a/c 9000

To security premium a/c 2700

To profit and loss a/c 27640

In the above case company acquired Truck by issuing it's shares.extra 3 will be credited to the security premium account and balance either gain or loss Accounted through profit and loss a/c.

Truck 2

Truck 2 a/c.....Dr 44960

To Cash a/c. 5620

To liability a/c 39340

Restatement of financial liability

Profit and loss a/c . 729

To liability . a/c 729

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