Clark Co. and Keys Inc. exchange equipment. Information related to this exchange follows. Clark Keys Co. Inc. Equipment given up: Equipment (original cost) $60,000 $70,000 Accumulated depreciation 20,000 24,000 Fair value 36,000 48,000 Cash exchanged (12,000) 12,000 Required a. 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.

Clark Co. and Keys Inc. exchange equipment. Information related to this exchange follows. Clark Keys Co. Inc. Equipment given up: Equipment (original cost) $60,000 $70,000 Accumulated depreciation 20,000 24,000 Fair value 36,000 48,000 Cash exchanged (12,000) 12,000 Required a. 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.

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

Chapter4: Balance Sheet: Presenting And Analyzing Resources And Financing

Section: Chapter Questions

Problem 23E

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Stewart Company exchanges an asset with Leonard Corporation. Details of the exchange are as follows: Stewart company’s Piece of Equipment: Cost $1,000,000Accumulated depreciation 400,000Fair Value $800,000 Leonard Corporation’s Building: Cost $1200,000 Accumulated depreciation $550,000 Fair Value $950,000 Required a) Prepare the appropriate journal entries for both companies for the above exchange assumingthey are public companies.b) If Stewart Company paid $100,000 in this transaction. Record the appropriate journal entry inStewart’s books.c) Repeat b) assuming that Stewart Company is a private company and that the fair value ofLeonard’s building is the most determinable fair value
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