5 On January 1, 2014, Uncomfortable Chair Airline (UCA) and No Legroom Airline (NLA) decided to exchange their aircralt. UCAprovides charters for short people and wants planes owned by NLA that have no legroom. NLA has terble customer serviceand doesn't care if its passengers are uncomfortable and so they are interested in the planes owned by UCA. Information aboutthe aircraft to be exchanged is as follows:Original CostAccumulated DepreciationFair ValueUCA Airplanes$16,000,000NLA Airplanes$14,000,0007,000,0006,000,00015,000,00013,000,000Because the planes owned by UCA are worth more than the planes at NLA, NLA has agreed to pay UCA $2.000,000 cash inorder to make the value exchanged equal for both parties.REQUIRED: If UCA does not consider the transaction to have "commercial substance, what journal entry would UCA prepare torecord the exchange?

A transaction is said to have no commercial substance if it is not expected to impact the future…

On January 1, 2014, Uncomfortable Chair Airline (UCA) and No Legroom Airline (NLA) decided to exchange their aircralt. UCA provides charters for short people and wants planes owned by NLA that have no legroom. NLA has temble customer service and doesn't care if its passengers are uncomfortable and so they are interested in the planes owned by UCA. nformation about the aircraft to be exchanged is as follows: Original Cost Accumulated Depreciation UCA Airplanes $16,000,000 NIAAirolanes $14,000,000 7,000,000 6,000,000 Fair Value 15,000,000 13,000.000 Because the planes owned by UCA are worth more than the planes at NLA, NLA has agreed to pay UCA $2.000,000 cah in order to make the value exchanged equal for both parties. REQUIRED: If UCA does not consider the transaction to have "commercial substance" what journal entry would UCA prepare to record the exchange?

On January 1, 2014, Uncomfortable Chair Airline (UCA) and No Legroom Airline (NLA) decided to exchange their aircralt. UCA provides charters for short people and wants planes owned by NLA that have no legroom. NLA has temble customer service and doesn't care if its passengers are uncomfortable and so they are interested in the planes owned by UCA. nformation about the aircraft to be exchanged is as follows: Original Cost Accumulated Depreciation UCA Airplanes $16,000,000 NIAAirolanes $14,000,000 7,000,000 6,000,000 Fair Value 15,000,000 13,000.000 Because the planes owned by UCA are worth more than the planes at NLA, NLA has agreed to pay UCA $2.000,000 cah in order to make the value exchanged equal for both parties. REQUIRED: If UCA does not consider the transaction to have "commercial substance" what journal entry would UCA prepare to record the exchange?

SWFT Comprehensive Vol 2020

43rd Edition

ISBN:9780357391723

Author:Maloney

Publisher:Maloney

Chapter14: Property Transact Ions: Capital Gains And Losses, § 1231, And Recapture Provisions

Section: Chapter Questions

Problem 7DQ

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