During the current year, Marshall Construction trades an old crane that has a book value of $90,000 (original cost $140,000 less accumulated depreciation $50,000) for a new crane from Brigham Manufacturing Co. The new crane cost Brigham $165,000 to manufacture and is classified as inventory. The following information is also available. Marshall Const. Brigham Mfg. Co. Fair value of old crane $ 82,00000 00 00 Fair value of new crane 00 00 00 $200,00000 Cash paid 00 118,00000 00 00 Cash received 00 00 00 118,00000 Instructions a. Assuming that this exchange is considered to have commercial substance, prepare the journal entries on the books of (1) Marshall Construction and (2) Brigham Manufacturing. b. Assuming that this exchange lacks commercial substance for Marshall, prepare the journal entries on the books of Marshall Construction. c. Assuming the same facts as those in (a), except that the fair value of the old crane is $98,000 and the cash paid is $102,000, prepare the journal entries on the books of (1) Marshall Construction and (2) Brigham Manufacturing. d. Assuming the same facts as those in (b), except that the fair value of the old crane is $97,000 and the cash paid $103,000, prepare the journal entries on the books of (1) Marshall Construction and (2) Brigham Manufacturing.
During the current year, Marshall Construction trades an old crane that has a book value of $90,000 (original cost $140,000 less accumulated
|
|
Marshall Const.
|
|
Brigham Mfg. Co.
|
|
| Fair value of old crane |
|
$ 82,00000
|
00
|
00
|
| Fair value of new crane |
00
|
00
|
00
|
$200,00000
|
| Cash paid |
00
|
118,00000
|
00
|
00
|
| Cash received |
00
|
00
|
00
|
118,00000
|
Instructions
a. Assuming that this exchange is considered to have commercial substance, prepare the
b. Assuming that this exchange lacks commercial substance for Marshall, prepare the journal entries on the books of Marshall Construction.
c. Assuming the same facts as those in (a), except that the fair value of the old crane is $98,000 and the cash paid is $102,000, prepare the journal entries on the books of (1) Marshall Construction and (2) Brigham Manufacturing.
d. Assuming the same facts as those in (b), except that the fair value of the old crane is $97,000 and the cash paid $103,000, prepare the journal entries on the books of (1) Marshall Construction and (2) Brigham Manufacturing.
Trending now
This is a popular solution!
Step by step
Solved in 4 steps with 4 images
