Italy Corp. exchanged Building 24, which has an appraised value of $1,700,000; a cost of $2,800,000 and accumulated depreciation of $1,300,000, for Building M, which belongs to Russia Ltd. Building M, has an appraised value of $1,580,000, a cost of $3,100,000, and accumulated Depreciation of $1,750,000. Russia paid Italy $120,000 cash, which is equal to the difference between the appraised values of the two buildings. Assume depreciation has been recorded by both companies up to the date of exchange. Required: Prepare the entries on both companies’ books, assuming no commercial substance

Italy Corp. exchanged Building 24, which has an appraised value of $1,700,000; a cost of $2,800,000 and accumulated depreciation of $1,300,000, for Building M, which belongs to Russia Ltd. Building M, has an appraised value of $1,580,000, a cost of $3,100,000, and accumulated Depreciation of $1,750,000. Russia paid Italy $120,000 cash, which is equal to the difference between the appraised values of the two buildings. Assume depreciation has been recorded by both companies up to the date of exchange. Required: Prepare the entries on both companies’ books, assuming no commercial substance

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter11: Long-term Assets

Section: Chapter Questions

Problem 10PA: Buchanan Imports purchased McLaren Corporation for $5,000,000 cash when McLaren had net assets worth...

See similar textbooks

Similar questions

Buchanan Imports purchased McLaren Corporation for $5,000,000 cash when McLaren had net assets worth $4,500,000. A. What is the amount of goodwill in this transaction? B. What is Buchanans journal entry to record the purchase of McLaren? C. What journal entry should Buchanan write when the company internally generates additional goodwill in the year following the purchase of McLaren?
Sullivan Corp. exchanged one of their buildings (Building 24), which, on the date of exchange, has an appraised value of $1,710,000, an original cost of $2,800,000 and accumulated depreciation of $1,300,000, for a building from Rutherford Ltd (called Building M). On the date of exchange, Building M has an appraised value of $1,625,000, an original cost of $3,100,000, and accumulated Depreciation of $1,650,000. Rutherford paid Sullivan $85,000 in addition to the exchange of building. Assume depreciation has been recorded on both buildings on the date of exchange. This transaction has no commercial substance. To clarify: Sullivan is giving up Building 24 to get Building M; and Rutherford is giving up Building M to get Building 24. Required: a) Prepare the journal entries that Sullivan Corp. would make to record the exchange. b) Prepare the journal entries that Rutherford Ltd. would make to record the exchange.
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
Brooks LLC exchanged machinery with an appraised value of $4,600,000, a recorded cost of $7,200,000 and accumulated depreciation of $3,600,000 with Steel Inc for machinery Steel owns. The machinery has an appraised value of $4,520,000, a recorded cost of $8,672,000, and accumulated depreciation of $4,752,000. Steel also gave Brooks $160,000 in the exchange. Assume depreciation has already been updated. Instructions (A) Prepare the entry on Brooks books if the exchange had commercial substance. Show Gain/Loss computations. (b) Prepare the Steel’s books if the exchange lacked commercial substance. Show Gain/Loss computations.
Hodge Co. exchanged Building 24 which has an appraised value of $6,400,000, a cost of $10,120,000, and accumulated depreciation of $4,800,000 for Building M belonging to Fine Co. Building M has an appraised value of $6,016,000, a cost of $12,040,000, and accumulated depreciation of $6,336,000. The correct amount of cash was also paid. Assume depreciation has already been updated. Instructions Prepare the entries on both companies' books assuming the exchange had no commercial substance. Show a check of the amount recorded for Building M on Hodge's books. (Round to the nearest dollar.) PLEASE NO Hand writing, and don't upload a picture.
Hoyle Company owns a manufacturing plant with a fair value of $4,600,000, a recorded cost of $8,500,000, and accumulated depreciation of $3,650,000. Patterson Company owns a warehouse with a fair value of $4,400,000, a recorded cost of $6,900,000, and accumulated depreciation of $2,800,000. Hoyle and Patterson exchange assets, with Hoyle also receiving cash of $200,000 from Patterson. The exchange is considered to have commercial substance. Required: Record the exchange on the books of: Hoyle Patterson
HOT Company exchanges an automobile machine with a carrying amount of $135,000 ( original cost , $550,000) for a molding machine owned by Water Company. The molding machine is carried in Water's Company books at a cost of $240,000 with an accumulated depreciation of $83,000 at the time of exchange. Assume that the fair values of the automobile and the molding machine are $145,000 and $150,000, respectively. In addition, Hot Company paid $5,000 to Water Company to complete the transaction. 1. How much is the gain or loss on the exchange to be recognized by Water Company?
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?
In October, Dean Company exchanged an old packing machine costing P240,000 and 50% depreciated, for a dissimilar used machine and paid a cash difference of P32,000. The market value of the old packaging machine was determined to be P140,000. How much is the cost of the newly acquired machine and the amount of gain or loss, respectively, that Dean should record on this exchange?
Saman Co exchanged a Machinery with Amar Inc. in exchange for a building. Saman also paid 50,000 to Amar for this exchange. Other details of the transaction are provided below: Saman Co. equipment: Cost Accumulated depreciation Fair value Required- $950,000 150,000 600,000 Amar Inc. Building: Cost Accumulated depreciation Fair value $750,000 180,000 550,000 a) Prepare the journal entry in the books of both companies, assuming both are publicly traded. b) Assuming now that Saman is a private company and that the fair value of building is the most reliable fair value, prepare the journal entry for Saman Co.
In June 2021, Titanic Company acquired a machine in exchanged for a non-monetary asset with a cost of P1,200,000 and an accumulated depreciation of P600,000 and paid a cash difference of P160,000. The market value of the non-monetary asset was determined to be P650,000. If the exchange ha commercial substance, what amount of gain is to be recognized?
Prince Company and Albert Company agreed to exchange tractor trailers. Information relating to these assets is as follows: Prince Albert Original acquisition cost 1,500,000 800,000 Accumulated depreciation 700,000 720,000 Fair value on date of exchange 900,000 150,000 In accordance with the agreement, Albert will pay P750,000 in cash to Prince which is the difference in fair value. Requirements: 1. Assuming the exchange lack commercial substance, what amount should Prince Company record as cost of the asset received in exchange? 2. Assuming the exchange lack commercial substance, what amount should Albert Company record as cost of the asset received in exchange?