Question

Sample Non-monetary Exchange Questions 2. 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 Gain Bright Company exchanges a used truck (Cost $30,000; Accumulated Depreciation $28,000) for a new truck. The fair value of the used truck has been determined at $10,000 and Bright also pays $3,000 cash. Prepare the journal entry to record the exchange for Bright Company Exchange lacks commercial substance 3.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. -4. Gain (no boot and no cash paid) Bright Company exchanges a used truck (Cost $30,000; Accumulated Depreciation $28,000) for a new truck. The fair value of the used truck has been determined at $10,000. Prepare the journal entry to record the exchange for Bright Company 5 Gain (no boot and cash paid) Bright Company exchanges a used truck (Cost $30,000; Accumulated Depreciation $28,000) for a new truck. The fair value of the used truck has been determined at $10,000 and Bright also pays $3,000 cash. Prepare the journal entry to record the exchange for Bright Company. Gain (with < 25% boot) Bright Company exchanges a used truck (Cost $30,000; Accumulated Depreciation $28,000) for a new truck. The fair value of the used truck has been determined at $10,000. Bright also receives $1,000 cash as part of the exchange. The fair value of the new truck is estimated at $11,000. Prepare the journal entry to record the exchange for Bright Company 7, Gain (with 25% or more boot) Bright Company exchanges a used truck (Cost $30,000, Accumulated Depreciation $28,000) for a new truck. The fair value of the used truck has been determined at S10,000. Bright also receives $8,000 cash as part of the exchange. Prepare the journal entry to record the exchange for Bright Company.

Answer 1

Date	General Jounral		Debit	Credit
			Amoun in $
1	Accumulated Depreciation on used truck		2000
	New Truck		15000
	Loss on exhchange of used truck		5000
		Used Truck		20000
		Cash		2000
	To record the exchange of trucks
2	Accumulated Depreciation on used truck		28000
	New Truck		10000
		Used Truck		30000
		Cash		3000
		Gain on exchange of used truck		5000
	To record the exchange of trucks
3	Accumulated Depreciation on used truck		2000
	New Truck		15000
	Loss on exhchange of used truck		5000
		Used Truck		20000
		Cash		2000
	To record the exchange of trucks
4	Accumulated Depreciation on used truck		28000
	New Truck		2000
		Used Truck		30000
	To record the exchange of trucks
5	Accumulated Depreciation on used truck		28000
	New Truck		10000
		Used Truck		30000
		Cash		3000
		Gain on exchange of used truck		5000
	To record the exchange of trucks
6	Accumulated Depreciation on used truck		28000
	New Truck		1909
	Cash		1000
		Used Truck		30000
		Gain on exchange of used truck		909
	To record the exchange of trucks
Note	Cash is	9.09%	of the fair value of the truck
	Gain will be recognized to the extent of		=10000*9.09090%
	Gain on exchange of trucks		909.09
7	Accumulated Depreciation on used truck		28000
	New Truck		10000
	Cash		8000
		Used Truck		30000
		Gain on exchange of used truck		16000
	To record the exchange of trucks