8. (8 points) This machinery was acquired
by trading in used machinery. Facts concerning the trade-in are as
follows. Cost of machinery traded (old machine) $100,000
Accumulated depreciation to date of sale (old machine) 40,000 Fair
value of machinery traded (old machine) 83,000 Cash received 12,000
Fair value of machinery acquired (new machine) 71,000 Record the
journal entry for the above nonmonetary asset exchange for the
following scenarios: a. The transaction has commercial substance.
b. The transaction lacks commercial substance
Homework Answers
ANSWER:
As per the given question
Entry wil be:
Machinery 70,000
Cash 20,000
Accumulated dep 60,000
Machinery 150,000
Note: Cost of machinery traded will be credited and accumulated dep will be debit
Cash received will be debited
And the difference will be value of machine acquired.
As there is no commercial substance.
Thank you for question.....kindly rate......it helps me a lot
Add Answer to:
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