Question

Martinez is a cologne retailer. During 2020, Martinez had the following non-monetary transactions. Scenario 1: Martinez exchanged 5,100 of its common shares (FMV of $9 each) for equipment with a FMV of $51,000 Scenario 2: Martinez traded machinery with a cost of $16,500 and accumulated depreciation of $6,600 for an inventory management equipment owned by Francis Inc. which is expected to help increase the speed with which Martinez fills its orders. An additional $2,800 was paid by Martinez in the exchange. The inventory management equipment has a cost of $20,000 and accumulated depreciation of $12,000 on Francis' accounting records. Fair values for the machinery and the inventory management equipment are $10,900 and $13,700 respectively. For each of the above independent scenarios, prepare the journal entry necessary to record the transaction, assuming that Martinez follows IFRS. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Account Titles and Explanation Debit Credit No. Scenario 1 Scenario 2

Answer 1

No.	Account title and Explanation	Debit	Credit
Scenario 1	Equipment (use market value)	$51,000
	Common stock		$51,000
	[Exchanged common shares for equipment]
Scenario 2	Equipment	$13,700
	Accumulated depreciation-Machinery	$6,600
	Machinery		$16,500
	Cash		$2,800
	Gain on disposal of machinery		$1,000
	[Traded machinery for an inventory management equipment]