Clark Co. and Keys Inc. exchange equipment. Information related to this exchange follows.Equipment given up:Clark Co. Keys Inc.Accumulated depreciationEquipment (original cost)$54,000 $63,00018,000 21,60032,400 43,200(10,800) 10,800Fair valueCash exchangedRequireda. Record the exchange for Clark Co. assuming the transaction has commercial substance.b. Record the exchange for Keys Inc. assuming the transaction has commercial substance.c. Record the exchange for Clark Co. assuming the transaction lacks commercial substance.d. Record the exchange for Keys Inc. assuming the transaction lacks commercial substance.Exchange has Commercial SubstanceExchange Lacks Commercial Substancea. Record the exchange for Clark Co. assuming the transaction has commercial substance.b. Record the exchange for Keys Inc. assuming the transaction has commercial substance.a.Account NameDr.Cr.

Step 1: Determine the book value of the equipment for both companies:Clark Co.: Book value =…

Answered: Clark Co. and Keys Inc. exchange…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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The following assets are exchanged between Company A and Company B: Company A Company B Asset original cost $53,400 $65,100 Accumulated depreciation 32,630 39,600 Net book value 20,770 25,500 Fair value of asset 24,200 28,600 In addition, Company A paid Company B $4,400 cash.Required:Prepare the journal entry to record the transaction for Company A and B
On August 1, Crane, Inc. exchanged productive assets with Cheyenne, Inc. Crane’s asset is referred to below as “Asset A,” and Cheyenne’ is referred to as “Asset B.” The following facts pertain to these assets. Asset A Asset B Original cost $117,120 $134,200 Accumulated depreciation (to date of exchange) 48,800 57,340 Fair value at date of exchange 73,200 91,500 Cash paid by Crane, Inc. 18,300 Cash received by Cheyenne, Inc. 18,300 Assuming that the exchange of Assets A and B lacks commercial substance, record the exchange for both Crane, Inc. and Cheyenne, Inc. in accordance with generally accepted accounting principles. Account Titles and Explanation Debit Credit Crane, Inc.’s Books Cheyenne, Inc.’s Books
On August 1, Tamarisk, Inc. exchanged productive assets with Vaughn, Inc. Tamarisk's asset is referred to below as "Asset A," and Vaughn' is referred to as "Asset B." The following facts pertain to these assets. Asset A Asset B Original cost $126,720 $145,200 Accumulated depreciation (to date of exchange) 52,800 62,040 Fair value at date of exchange 79,200 99,000 Cash paid by Tamarisk, Inc. 19,800 Cash received by Vaughn, Inc. 19,800 (a) Assuming that the exchange of Assets A and B has commercial substance, record the exchange for both Tamarisk, Inc. and Vaughn, Inc. in accordance with generally accepted accounting principles. (Round answers to O decimal places, e.g. 5,275. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List all debit entries before credit entries.) Account Titles and Explanation Tamarisk, Inc's Books Debit Credit Vaughn,…
Martinez Company exchanged equipment used in its manufacturing operations plus $3,360 in cash for similar equipment used in the operations of Sandhill Company. The following information pertains to the exchange. Equipment (cost) Accumulated depreciation Fair value of equipment Cash given up $31,360 21,280 14,000 3,360 $31,360 11,200 17,360 Prepare the journal entries to record the exchange on the books of both companies. Assume that the exchange has commercial substance. (Credit account titles are automatically indented when 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.)
Hartney Company and Indoy Company had an exchange of productive assets. Hartney Company exchanges a building for Indoy's equipment. The following information are as follows: Hartney (Machine) Indoy (Equipment) Cost of asset exchanged P900,000 P800,000 Accumulated depreciation 540,000 320,000 Fair value of asset exchanged 400,000 350,000 Cash received (paid) 50,000 (50,000) Assuming that the transaction has a commercial substance, how much should Indoy recognize gain/loss in the exchange? (Note: Indicate "( )" if loss)
Bloomington Inc. exchanged land for equipment and $2,600 in cash. The book value and the fair value of the land were $105,500 and $89,100, respectively.Assuming that the exchange has commercial substance, Bloomington would record equipment and a gain/(loss)on exchange of assets in the amounts of: Equipment Gain/(loss) a. $ 86,500 $ 2,600 b. $ 105,500 $ (2,600 ) c. $ 86,500 $ (16,400 ) d. None of these answer choices are correct. Option C Option D Option A Option B
How much should be recorded as the purchase price of theindividual PPE items: 5. The old equipment has an original cost of P1,500,000,accumulated depreciation of P600,000, and fair value ofP1,000,000. The new equipment obtained throughexchange has a fair value of P1,200,000. The balance was settled with cash. The exchange will not affect the future cashflows of the entity.
Item 22 Below is information relative to an exchange of similar assets by a company. Assume the exchange has commercial substance. Old Equipment Cash Book Value Fair Value Paid $ 49,700 $ 60,500 $ 14,100 The company would record the new equipment at:
Bella company entered into an exchange agreement of exchanging its equipment for two pickup vehicles. The equipment has original cost of $32,000 and accumulated depreciation of $7,000. The fair value of equipment was $22,000 and Bella also paid cash of $7,200 for the exchange. At what amount will pick up vehicles be recorded assuming that the exchange has commercial substance. a. $32,200 b. $29,200 c. $22,000 d. $25,000
Below is the information relative to an exchange of old equipment for new equipment by Ehrlich Company. Old Equipment Book Value Fair Value Cash Paid $450,000 $510,000 $90,000 The old equipment had a cost to Ehrlich of $600,000. Show your calculations of the gain or loss incurred on the exchange. 1. Prepare the journal entry for Ehrlich to record the exchange of the equipment assuming the exchange lacks commercial substance. 2 Prepare the journal entry for Ehrlich to record the exchange of the equipment assuming the exchange has commercial substance. 3. Assume instead that the machine was sold for cash on 1/1 for $430,000. Prepare the necessary journal entry.
On 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 $ 134,400 $ 154,000 Accumulated depreciation (to date of exchange) 56,000 65,800 Fair value at date of exchange 84,000 105,000 Cash paid by Bonita, Inc. 21,000 Cash received by Windsor, Inc. 21,000 Assuming that the exchange of Assets A and B has commercial substance, record the exchange for both Bonita, Inc. and Windsor, Inc. in accordance with generally accepted accounting principles. (Round answers to 0 decimal places, e.g. 5,275. Credit account titles are automatically indented when 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.) BONITA INC ENTRY: WINDSOR INC ENTRY: I answered this myself but got it…
On August 1, Vaughn, Inc. exchanged productive assets with Bramble, Inc. Vaughn's asset is referred to below as "Asset A," and Bramble' is referred to as "Asset B." The following facts pertain to these assets. Original cost Accumulated depreciation (to date of exchange) Fair value at date of exchange Cash paid by Vaughn, Inc. Cash received by Bramble, Inc. (a) Asset A Account Titles and Explanation Vaughn, Inc.'s Books $144,000 60,000 90,000 22,500 Asset B $165,000 70,500 112,500 22,500 Assuming that the exchange of Assets A and B has commercial substance, record the exchange for both Vaughn, Inc. and Bramble, Inc. in accordance with generally accepted accounting principles. (Round answers to 0 decimal places, e.g. 5,275. Credit account titles are automatically indented when 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.) Debit Credit

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