Question

CALCULATOR FULL SCREEN PRINTER VERSION BACK NEXT Problem 10-9 (Part Level Submission) August 1, Bonita, Inc. exchanged productive assets with Windsor, Inc. Bonita's asset is referred to below as "Asset A, and Windsor' is referred to as "Asset B. The following facts pertain to these assets. Asset A Asset B Original cost Accumulated depreciation (to date of exchange) Fair value at date of exchange Cash paid by Bonita, Inc. Cash received by Windsor, Inc. $144,000 165,000 60,00070,500 90,000 112,500 22,500 22,500

Answer 1

Answer

--All working forms part of the answer

--Journal Entry #1

Bonita Inc's Book
Accounts title	Debit	Credit	Working
Asset [New Equipment Asset]	$             112,500		[Fair Value of Asset received - Asset B]
Accumulated Depreciation	$               60,000		[Accumulated Depreciation balance of Asset A]
Asset [Equipment]		$             144,000	[Original Cost of Asset A]
Cash		$               22,500	[Cash paid]
Gain on Exchange		$                 6,000	[112500 + 60000 - 144000 - 22500]
(Assets exchange having commercial substances)

--Journal Entry #2

Windsor Inc's Book
Accounts title	Debit	Credit	Working
Asset [New Equipment Asset]	$               90,000		[Fair Value of Asset received - Asset A]
Cash	$               22,500		[Cash received]
Accumulated Depreciation	$               70,500		[Accumulated Depreciation balance of Asset B]
Asset [Equipment]		$             165,000	[Original Cost of Asset B]
Gain on Exchange		$               18,000	[90000+22500+70500-165000]
(Assets exchange having commercial substances)