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. $25,000 $32,200 $22,000 $29.200
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- 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. $25,000On September 3, 2018, the Robers Company exchanged equipment with Phifer Corporation. The facts of theexchange are as follows:Robers’ Asset Phifer’s AssetOriginal cost $120,000 $140,000Accumulated depreciation 55,000 63,000Fair value 75,000 70,000To equalize the exchange, Phifer paid Robers $5,000 in cash.Required:Record the exchange for both Robers and Phifer. The exchange has commercial substance for both companies.On August 1, Hyde, Inc. exchanged productive assets with Wiggins, Inc. Hyde's asset is referred to below as "Asset A," and Wiggins' is referred to as "Asset B." The following facts pertain to these assets.Asset AOriginal Cost $96,000Accumulated Depreciation (to date of exchange) $40,000Fair Value at date of exchange $60,000Cash paid by Hyde, Inc $15,000Asset BOriginal Cost $110,000Accumulated Depreciation (to date of exchange) $47,000Fair Value at date of exchange $75,000Cash paid by Hyde, Inc $15,000Instructions:(a) Assuming that the exchange of Assets A and B has commercial substance, record the exchange for both Hyde, Inc. and Wiggins, Inc. in accordance with generally accepted accounting principles.(b) Assuming that the exchange of Assets A and B lacks commercial substance, record the exchange for both Hyde, Inc. and Wiggins, Inc. in accordance with generally accepted accounting principles.
- Beck Company and Train Corporation exchange equipment. Relevant information are as follows: Beck Train Equipment 2,000,000 2,500,000 Accumulated depreciation 1,125,000 1,687,500 Fair value 750,000 1,000,000 Cash payment/(received) 250,000 (250,000) Beck Company also traded an old equipment with a dealer for a newer model. Relevant information are as follows:Old equipment:Cost P1,400,000Accumulated depreciation 1,000,000Fair value 350,000Trade in value 500,000New equipment:List price P2,000,000Trade in value of old equipment (500,000)Cash payment P1,500,000Required1. Prepare journal entries related to the exchange using the following assumptions:a) Fair value approachb) Trade in value approachBelow is information relative to an exchange of equipment by Pensacola Inc. Assume the exchange has commercial substance. Case A Case B Old Equipment Book Value $75,000 $60.000 Old Equipment Fair Value $80,000 $56,000 ECOM dock 13 rations In Case B, Pensacola would record a gain/lloss) of. O $4,000. 0 (54,000. O ($10,000) O None of these answer choices are correct. Cash Received $12,000 $10,000Jowee Company exchanged an old machine, costing P3,000,000 and 50% depreciated, for a used machine and paid a cash difference of P500,000. The fair value of the old machine was determined to be P1,800,000. What amount should be recorded as cost of the machine received in exchange? A. 1,800,000 B. 2,300,000 C. 1,300,000 D. 2,000,000
- - Entity A acquires equipment on January 1, 20x1. Information on costs is as follows: Purchase price, gross of Php 10,000 trade discount Non-refundable purchase taxes Delivery and handling costs Installation costs 800,000 20,000 40,000 30,000 Present value of decommissioning and restoration Costs 10,000 How much is the initial cost of the equipment? a. 900,000 b. 820,000 c. 870,000 d. 890,000Below 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, Hyde, Inc. exchanged productive assets with Wiggins, Inc. Hyde’s asset is referred to below as “Asset A,” and Wiggins’ is referred to as “Asset B.” The following facts pertain to these assets. Asset A 0Asset B0 Original cost $96,000 $110,000 Accumulated depreciation (to date of exchange) 40,000 47,000 Fair value at date of exchange 60,000 75,000 Cash paid by Hyde, Inc. 15,000 Cash received by Wiggins, Inc. 15,000 Instructions a. Assuming that the exchange of Assets A and B has commercial substance, record the exchange for both Hyde, Inc. and Wiggins, Inc. in accordance with generally accepted accounting principles. b. Assuming that the exchange of Assets A and B lacks commercial substance, record the exchange for both Hyde, Inc. and Wiggins, Inc. in accordance with generally accepted accounting principles.
- Entity A acquires equipment on January 1, 20x1. Information on costs is as follows: Purchase price, gross of P10,000 trade discount 800,000 Non-refundable purchase taxes 20,000 Delivery and handling costs 40,000 Installation costs 30,000 Present value of decommissioning and restoration costs 10,000 1.) How much is the initial cost of the equipment? A. P 890,000 B. P 820,000 C. P 900,000 D. P 870,000Mohave Inc. purchased land, building, and equipment from Laguna Corporation for a cash payment of $315,000. The estimated fair values of the assets are land, $60,000; building, $220,000; and equipment, $80,000. Journalize the purchase using the relative sales value method. Date Account Debit Credit MM/DD/YY 6 of 9Required information [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 $20,500 (original cost of $45,000 less accumulated depreciation of $24,500) and a fair value of $10,700. Kapono paid $37,000 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 $585,000 and a fair value of $870,000. Kapono paid $67,000 cash to complete the exchange. The exchange has commercial substance. Required: 1. What is the amount of gain or loss that Kapono would recognize on the exchange? What is the initial value of the new land? 2. Assume the fair value of the farmland given is $468,000 instead of $870,000. What is the amount of gain or loss that Kapono would recognize on the exchange? What is the initial value of the new land? 3. Assume the same facts as…
