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.
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.
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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question 6
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
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.
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