Homework Answers
| Exchange has commercial substance | ||||||
| Journal entries in the books of Athens | ||||||
| S.no. | Accounts title and explanations | Debit $ | Credit $ | |||
| a. | New machine equipment | 11,40,000 | ||||
| Cash account | 30,000 | |||||
| Accumulated depreciation | 9,00,000 | |||||
| Old Machine equipment | 18,00,000 | |||||
| Gain on exchange of equipment | 2,70,000 | |||||
| (for exchnage of assets) | ||||||
| Exchange lacks commercial substance | ||||||
| Journal entries in the books of Sparta | ||||||
| S.no. | Accounts title and explanations | Debit $ | Credit $ | |||
| a. | New machine equipment | 10,02,000 | ||||
| Accumulated depreciation | 11,88,000 | |||||
| Cash account | 30,000 | |||||
| Old Machine equipment | 21,60,000 | |||||
| (for exchnage of assets) | ||||||
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PROBLEM #2 (Recommended Time Allocation: 14 Minutes; 8 Marks) Athens Inc. exchanged machinery with an appraised...
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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...
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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...
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...
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...
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