transportation company exchanged a number of used buses
3- Transportation Company exchanged a number of used buses plus cash for a semi-bus. The used buses have a combined book value of \(\$ 45,000\) (cost \(\$ 67,000\) less \(\$ 22,000\) accumulated depreciation). The company's purchasing agent, experienced in the secondhand market, indicates that the used buses have a fair market value of \(\$ 47,000\). In addition to the buses, the company must pay \(\$ 10,000\) cash for the semi-bus.
a. compute the cost of the semi-bus. ( 2 marks)
b. record the exchange transactions. (5 marks)
Homework Answers
Requirement a
| Fair value of buses exchanged | $47,000 |
| Cash Paid | $10,000 |
| Cost Of semi Bus | $57,000 |
Requirement b
| General Journal | Debit($) | Credit($) |
| Bus(semi) | $57,000 | |
| Accumulated Depriciation- Buses(used) | $22,000 | |
| Buses (used) | $67,000 | |
| Gain on Disposal of buses*** | $2,000 | |
| Cash | $10,000 |
*** Gain on disposal =$57,000 +$22,000 -$67,000 -$10,000 = $2,000
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Bus
Acquired
Cost
Salvage
Value
Useful Life
in Years
Depreciation
Method
1
1/1/18
$ 99,000
$ 5,500
5
Straight-line
2
1/1/18
110,000
10,500
4
Declining-balance
3
1/1/19
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8,500
4
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Bus
Acquired
Cost
Salvage
Value
Useful Life
in Years
Depreciation
Method
1
1/1/17
$ 99,400
$ 7,500
4
Straight-line
2
1/1/17
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4
Declining-balance
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1/1/18
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4
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different accountant selected the depreciation method for each bus,
and various methods were selected. Information concerning the buses
is summarized as follows.
Bus
Acquired
Cost
Salvage
Value
Useful Life
in Years
Depreciation
Method
1
1/1/18
$ 99,000
$ 5,500
5
Straight-line
2
1/1/18
110,000
10,500
4
Declining-balance
3
1/1/19
89,000
8,500
4
Units-of-activity
For the declining-balance method, the company uses the
double-declining...
In recent years, Swifty Transportation purchased three used
buses. Because of frequent turnover in the accounting department, a
different accountant selected the depreciation method for each bus,
and various methods were selected. Information concerning the buses
is shown as follows.
Bus
Acquired
Cost
Salvage
Value
Useful Life
in Years
Depreciation
Method
1
1/1/17
$ 99,400
$ 7,500
4
Straight-line
2
1/1/17
118,000
10,000
4
Declining-balance
3
1/1/18
82,400
8,000
4
Units-of-activity
For the declining-balance method, the company uses the
double-declining...
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