Homework Answers
E10-10
In the books of Denver:
| Accounts and Explanation | Debit | Credit |
| Accumulated depreciation | 55000 | |
| Warehouse (new) ($28000 + $2000) | 30000 | |
| Loss on disposal | 7000 | |
| Warehouse (old) | 90000 | |
| Cash | 2000 | |
| (To record the exchange of warehouse) |
Since the exchange has commercial substance, the new asset is recorded at the fair value of the old asset exchanged plus the cash paid.
In the books of Bristol:
| Accounts and Explanation | Debit | Credit |
| Cash | 2000 | |
| Warehouse (new) ($30000 - $2000) | 28000 | |
| Accumulated depreciation | 25000 | |
| Loss on disposal | 10000 | |
| Warehouse (old) | 45000 | |
| (To record the exchange of warehouse) |
Since the exchange has commercial substance, the new asset is recorded at the fair value of the old asset exchanged less the cash received.
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PLEASE SOLVE FOR E10-10
ME HOW E10-9 Exchange of Assets Two independent companies, Denver and Bristol,...
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EXtra credr Sample Non-monetary Exchange Questions 10 poinTs # to 16 Exchange has commercial substance "18 Due 1. Loss Bright Company exchanges a used truck (Cost $20,000; Accumulated Depreciation $2,000) for a new truck. The fair value of the used truck has been determined at $15,000 and Bright also pays $2,000 cash. Prepare the journal entry to record the exchange for Bright Company. 2. Gain Bright Company exchanges a used truck (Cost $30,000; Accumulated Depreciation $28,000) for a new truck....
Prepare the journal entries necessary to record the exchange,
assuming (a) has commercial substance, and (b) lacks commercial
substance.
*Practice Exercise 10-4 Marin Inc. purchased a commercial grade soft-serve ice cream machine on September 30, 2017. Marin traded in its existing machine and paid cash in the transaction. The details of the transaction are as follows: • List price of new freezer • Cash paid • Cost of old machine (4-year life, $1,170 salvage value) • Accumulated depreciation-old machine (straight-line)...
Prepare the journal entries to record the exchange on the books of both companies. Assume that the exchange has commercial substance. (C account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry the account titles and enter 0 for the amounts.) Account Titles and Explanation Debit Credit Novak Company Splish Company Account Titles and Explanation Debit Credit Novak Company: Splish Company: Novak Company exchanged equipment used in its manufacturing...
Problem 10-6 Nonmonetary exchange (L010-6] Southern Company owns a building that it leases to others. The building's fair value is $1550,000 and its book value is $920.000 (original cost of $250.000 less accumulated depreciation of $1230,000). Southern exchanges this for a building owned by the Eastern Company. The building's book value on Eastern's books is $1.070,000 foriginal cost of $1,750,000 less accumulated depreciation of S680000) Eastern also gives Southern $155,000 to complete the exchange. The exchange has commercial substance for...
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