Acquisition by Exchange transaction
On January 1, 2020, Ogiso Company exchanged its old delivery truck with Martin Dealers Inc, for a brand new equipment. The following information pertains to the delivery truck
Ogiso
Original cost 500,000
Accumulated depreciation 300,000
Carrying/book value. 200,000
Cash paid by Ogiso to Martin inc. 100,000
Ogiso incurred P10,000 in transportation and installation of the brand new equipment
Required: For each of the following independent cases.
1. The gain or loss as a result of the exchange.
2. Prepare the journal entries in 2020 to record the exchange transaction.
Case 1
The old delivery truck has a fair value of P225,000. The brand new equipment has a fair market value of P300,000.
Case 2
The fair value of the old delivery truck could not be determined. The brand new equipment has a fair market value of P300,000.
Case 3
The fair value could not be determined for either the old delivery truck or the brand new equipment.
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