Question

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 first account field.)

Answer 1

Robers Books of Account Item No Accounts Title Debit(S) Credit(S) 1 Cash a/c $21,000 $78,000 Accumlated Deprection-Old Equipment1,19,000 New Equipment A/d To Old Equipment To Gain on Exchange of Assets $2,00,000 $18,000 Phifer's Books of Account 2 New Equipment a/c Accumlated Deprection-Old Equipment1,27,000 Loss On Exchaange of Assets $99,000 $15,000 $21,000 2,20,000 To Cash