ZuoTi.Pro
Question

On July 1, 2016, Alpha Company exchanged an old computer (Equipment) with a historical cost of...

On July 1, 2016, Alpha Company exchanged an old computer (Equipment) with a historical cost of $1,000 that had accumulated depreciation of $600 after all June adjusting entries had been processed. The exchange was for a new computer having a fair value of $500. The transaction has commercial substance. Using this information, how much should be recorded on July 1 for the following accounts:

Accumulated Depreciation, Equipment

Gain or (Loss) on Sale (Enter any loss amount with $ sign inside of brackets)

Equipment - New

business   accounting   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1
Accumulated Depreciation, Equipment 600
Gain or (Loss) on Sale 100 =500-(1000-600)
Equipment - New 500
When the transaction has commercial substance, the asset exchanged is recorded at fair value
0 0
Add a comment
Answer #2

Answer

--[1]Accumulated Depreciation would be debited by the amount of $ 600.

--Book Value of asset given up = 1000 - 600 = $ 400
--fair value of asset received = $ 500

--Hence, there is a Gain on $ 100 [500 - 400] on this exchange transaction.

--[2]Gain on Sale will be CREDITED by $ 100

--[3]Equipment (new) will be debited by fair value of $ 500, and Equipment (old) will be credited by the cost which was $ 1000

0 0
Add a comment
Know the answer?
Add Answer to:
On July 1, 2016, Alpha Company exchanged an old computer (Equipment) with a historical cost of...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • On July 1, 2016, Alpha Company purchased for $76,000, equipment having a service life of eight...

    On July 1, 2016, Alpha Company purchased for $76,000, equipment having a service life of eight years and an estimated residual value of $4,000. Alpha has recorded depreciation of the equipment using the double-declining balance method. On December 31, 2018, before making any annual adjusting entries, the equipment was exchanged for new machinery having a fair value of $35,000. The transaction has commercial substance. Use this information to prepare all General Journal entries (without explanation) required to record the events...

  • Equipment that cost $390,300 and has accumulated depreciation of $313,600 is exchanged for equipment with a...

    Equipment that cost $390,300 and has accumulated depreciation of $313,600 is exchanged for equipment with a fair value of $160,000 and $40,000 cash is received. The exchange lacked commercial substance. Calculate the gain to be recognized from the exchange. Gain recognized SHOW LIST OF ACCOUNTS the entry for the exchange. Show a check of the amount recorded for the new equipment. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Account Titles and Explanation...

  • Equipment that cost $390,300 and has accumulated depreciation of $313,600 is exchanged for equipment with a...

    Equipment that cost $390,300 and has accumulated depreciation of $313,600 is exchanged for equipment with a fair value of $160,000 and $40,000 cash is received. The exchange lacked commercial substance. Calculate the gain to be recognized from the exchange. Gain recognized SHOW LIST OF ACCOUNTS Prepare the entry for the exchange. Show a check of the amount recorded for the new equipment. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Account Titles and...

  • Case A. Kapono Farms exchanged an old tractor for a newer model. The old tractor had...

    Case A. Kapono Farms exchanged an old tractor for a newer model. The old tractor had a book value of $12,500 (original cost of $29,000 less accumulated depreciation of $16,500) and a fair value of $9,100. Kapono paid $21,000 cash to complete the exchange. The exchange has commercial substance. Case B. Kapono Farms exchanged 100 acres of farmland for similar land. The farmland given had a book value of $505,000 and a fair value of $710,000. Kapono paid $51,000 cash...

  • On September 3, 2016, the Robers Company exchanged equipment with Phifer Corporation. The facts of the...

    On September 3, 2016, the Robers Company exchanged equipment with Phifer Corporation. The facts of the exchange are as follows: Robers’ Asset Phifer’s Asset   Original cost $ 200,000 $ 220,000   Accumulated depreciation 119,000 127,000   Fair value 99,000 78,000 To equalize the exchange, Phifer paid Robers $21,000 in cash. Required: Record the exchange for both Robers and Phifer. The exchange has commercial substance for both companies. (If no entry is required for a transaction/event, select "No journal entry required" in the...

  • Question 1 (1 point) Pensacola Inc. exchanged old equipment for new equipment in two exchange transactions....

    Question 1 (1 point) Pensacola Inc. exchanged old equipment for new equipment in two exchange transactions. Each transaction has commercial substance. Old Equipment Cash Book Value Fair Value Received Equipment A $75,000 $80,000 $12,000 Equipment B $60,000 $56,000 $10,000 For Equipment A. Pensacola would record the new equipment at: $68.000 $63.250. $67.250. $80,000 Question 2 (1 point) P. Chang & Co. exchanged land and $9,000 cash for equipment. The book value and the fair value of the land were $106,000...

  • Case A. Kapono Farms exchanged an old tractor for a newer model. The old tractor had...

    Case A. Kapono Farms exchanged an old tractor for a newer model. The old tractor had a book value of $12,500 (original cost of $29,000 less accumulated depreciation of $16,500) and a fair value of $9,100. Kapono paid $21,000 cash to complete the exchange. The exchange has commercial substance. Case B. Kapono Farms exchanged 100 acres of farmland for similar land. The farmland given had a book value of $505,000 and a fair value of $710,000. Kapono paid $51,000 cash...

  • [The following information applies to the questions displayed below.] Case A. Kapono Farms exchanged an old...

    [The following information applies to the questions displayed below.] Case A. Kapono Farms exchanged an old tractor for a newer model. The old tractor had a book value of $17,000 (original cost of $38,000 less accumulated depreciation of $21,000) and a fair value of $10,000. Kapono paid $30,000 cash to complete the exchange. The exchange has commercial substance. Case B. Kapono Farms exchanged 100 acres of farmland for similar land. The farmland given had a book value of $550,000 and...

  • 9. Equipment that cost $660,000 and has accumulated depreciation of $300.000 is exchanged for equipment with...

    9. Equipment that cost $660,000 and has accumulated depreciation of $300.000 is exchanged for equipment with a fair value of $480,000 and $120,000 cash is received The exchange lacked commercial substance. The gain to be recognized from the exchange is A) $48,000 B) $60,000 C) $180,000 D) $240,000

  • Hunter Saling Company exchanged an old sailboat for a new one. The old sailboat had a...

    Hunter Saling Company exchanged an old sailboat for a new one. The old sailboat had a cost of $270,000 and accumulated depreciation of $81,000. The new sailboat had an invoice price of $299,000. Hunter received a trade in allowance of $191,000 on the old sailboat, which meant the company paid $108,000 in addition to the old sailboat to acquire the new sailboat. If this transaction has commercial substance, what amount of gain or loss should be recorded on this exchange?

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT