Do all parts otherwise I will give you downvote On January 1, 2016, Cougar Company purchased a piece of machinery and signed a zero-interest-bearingnote in payment. The note requires Cougar to pay 100,000 in three years. The interest rate that properlyreflected the time value of money at the time was 5% and an equipment dealer in St. Louis sells theidentical piece of machinery for $86,000. Cougar expected the machinery to have an 8 year useful life,and $6,000 salvage value. Cougar depreciated the machine using the straight-line method. On June 30,2018, Cougar exchanged the machinery for a newer model. In addition to the old equipment, Cougar paid$10,000 cash. At the time of the exchange, the old machinery had a fair value of $70,000. Prepare thejournal entry to record this exchange, assuming the arrangement has commercial substance.Prepare the journal entry to record the exchange, assuming the arrangement lacks commercial substance.

Given: Cougar to pay 100,000 identical piece of machinery $86,000 Cougar paid=$10,000 fair…

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Business

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6, Cou The no

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter14: Financing Liabilities: Bonds And Long-term Notes Payable

Section: Chapter Questions

Problem 24E: Spath Company borrows 75,000 by issuing a 4-year, noninterest-bearing note to a customer on January...

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Question

Do all parts otherwise I will give you downvote

On January 1, 2016, Cougar Company purchased a piece of machinery and signed a zero-interest-bearing
note in payment. The note requires Cougar to pay 100,000 in three years. The interest rate that properly
reflected the time value of money at the time was 5% and an equipment dealer in St. Louis sells the
identical piece of machinery for $86,000. Cougar expected the machinery to have an 8 year useful life,
and $6,000 salvage value. Cougar depreciated the machine using the straight-line method. On June 30,
2018, Cougar exchanged the machinery for a newer model. In addition to the old equipment, Cougar paid
$10,000 cash. At the time of the exchange, the old machinery had a fair value of $70,000. Prepare the
journal entry to record this exchange, assuming the arrangement has commercial substance.
Prepare the journal entry to record the exchange, assuming the arrangement lacks commercial substance.

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