Aye Company owns an equipment with carrying amount of P2,000,000 and fair value of P2,500,000on the date of exchange. Bee Company also owns an equipment with carrying amount of P3,200,000 and fair value of P3,500,000 on the date of exchange. On the date of exchange, Aye Company exchanged its equipment and paid P1,000,000 for the equipment owned by Bee Company. The configuration of cash flows from the equipment acquired is expected to be significantly different from the configuration of cash flows of the equipment exchanged.•At what amount should Aye Company record the equipment acquired in exchange?•What amount of gain on exchange should be recognized by Aye Company?•At what amount should Bee Company record the equipment acquired in exchange?

Aye Company owns an equipment with carrying amount of P2,000,000 and fair value of P2,500,000on the date of exchange. Bee Company also owns an equipment with carrying amount of P3,200,000 and fair value of P3,500,000 on the date of exchange. On the date of exchange, Aye Company exchanged its equipment and paid P1,000,000 for the equipment owned by Bee Company. The configuration of cash flows from the equipment acquired is expected to be significantly different from the configuration of cash flows of the equipment exchanged.•At what amount should Aye Company record the equipment acquired in exchange?•What amount of gain on exchange should be recognized by Aye Company?•At what amount should Bee Company record the equipment acquired in exchange?

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

Chapter10: Property, Plant And Equipment: Acquisition And Subsequent Investments

Section: Chapter Questions

Problem 6MC: Ashton Company exchanged a nonmonetary asset with a cost of 30,000 and accumulated depreciation of...

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Ashton Company exchanged a nonmonetary asset with a cost of 30,000 and accumulated depreciation of 16,000 for another nonmonetary asset worth 12,000. Ashton also received 1,400 cash. In the entry to record this exchange, Ashton should record a: a. 2,000 gain b. 2,000 loss c. 600 gain d. 600 loss
CAKE Corporation exchanged a piece of equipment for new equipment. Data pertaining to the old equipment follows: Cost-P500,000; Accumulated Depreciation, P300,000; Fair value of old equipment, P180,000. The fair value of the new equipment is P230,000 and CAKE Corporation paid P50,000 to complete the exchange transaction. Assuming the configuration of the cash flows of the equipment is significantly different, how much is the gain or loss on exchange?
On july 1, 2021, PAOLO exchanged its-non-monetary asset (equipment) with YEN's non-monetary asset (machinery). the following data were made available: PAOLO: Equipment P4,400,000 accumulated depreciation 2,000,000 cash received from gerald 3,000,000 YEN: Machinery P3,700,000 Accumulated depreiation 1,800,000 Fair value of the machinery 2,100,000 The exchange has significantly changed the cash flows of each entity. How much is the cost of the new asset of PAOLO?
Company A had a machine with a carrying amount of P450,000. Company B had a delivery vehicle with a carrying amount of P300,000. Companies A and B exchanged the machine and vehicle, and Company B paid an additional P90,000 cash as part of the exchange. Assume that the fair value of the delivery vehicle is P420,000. The exchange has commercial substance. How much gain or loss should be recorded by Company B?
On July 1, 2021, PAOLO exchanged its non-monetary asset (equipment) with YEN's non- monetary asset (machinery). The following data were made available: PAOLO: Equipment Accumulated depreciation Fair value of the Equipment P4.400,000 2.000,000 3,000,000 YEN: Machinery Accumulated depreciation Fair value of the machinery P3,700,000 1,800,000 2,100,000 The exchange has significantly changed the cash flows of each entity. How much is cost of the new asset of PAOLO?
On 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.
Company A had a machine with a carrying amount of 450,000. Company B had a delivery vehicle with a carrying amoung of 300,000. Companies A and B exchanged the machine and vehicle, and Company B paid an additional 90,000 cash as part of the exchange. Assume that the fair value of the delivery vehicle is 420,000. The exchange has commercial substance. How much gain or loss should be recorded by Company B?
A company exchanged old equipment and $18,200 cash for similar equipment. The book value and the fair value of the old equipment were $81,000 and $91,800, respectively. Assuming that the exchange has commercial substance, the company would record a gain(loss) of:
The old equipment has an original cost of P1,500,000, accumulated depreciation of P600,000, and fair value of P1,000,000. The new equipment obtained through exchange 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. How much should be recorded as the PURCHASE PRICE of the equipment?
Beeman Company exchanged machinery with an appraised value of $3,538,500, a recorded cost of $5,435,000 and accumulated depreciation of $2,717,500 with Lacey Corporation for machinery Lacey owns. The machinery has an appraised value of $3,358,500, a recorded cost of $6,430,000, and accumulated depreciation of $3,536,500. Lacey also gave Beeman $180,000 in the exchange. Assume depreciation has already been updated
The following information relates to an exchange of assets that has commercial substance by Brent Company. Old Equipment Book Value Fair Value Cash Paid Case A $75,000 $85,000 $15,000 Case B $50,000 $45,000 $7,000 For Case B, equipment would be recorded at $Answer and Answer (gain/loss) of $Answer would also be recorded.
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.