Question

Exchanging assets—two situations

Partner Bank recently traded in office fixtures. Here are the facts:

Requirements

  1. Record Partner Bank’s trade-in of old fixtures for new ones. Assume the exchange had commercial substance.
  2. Now let’s change one fact. Partner Bank feels compelled to do business with Elm Furniture, a bank customer, even though the bank can get the fixtures elsewhere at a better price. Partner Bank is aware that the new fixtures’ market value is only $126,000. Record the trade-in. Assume the exchange had commercial substance.
Old fixtures:
Cost, $91,000
Accumulated depreciation, $68,000
New fixtures:
Cash paid, $110,000
Market value, $133,000
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Transcribed Image Text

Old fixtures: Cost, $91,000 Accumulated depreciation, $68,000 New fixtures: Cash paid, $110,000 Market value, $133,000

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