Southern Company owns a building that it leases to others. The building's fair value is $1,400,000 and its book value is $800, (original cost of $2,000,000 less accumulated depreciation of $1,200,000). Southern exchanges this for a building owned by Eastern Company. The building's book value on Eastern's books is $950,000 (original cost of $1,600,000 less accumulated depreciation of $650,000). Eastern also gives Southern $140,000 to complete the exchange. The exchange has commercial s for both companies. Required: Prepare the journal entries to record the exchange on the books of both Southern and Eastern. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) No 1 2 Event 1 2 Answer is complete but not entirely correct. General Journal Building-new Accumulated depreciation Cash Building old Gain on exchange of assets Building new Accumulated depreciation Building old Gain on exchange of assets Cash 40003 30033 Debit 1,400,000 1,200,000 140,000 1,400,000 650,000 Credit 2,000,000 740,000 1,600,000 310,000 140,000

Southern Company owns a building that it leases to others. The building's fair value is $1,400,000 and its book value is $800, (original cost of $2,000,000 less accumulated depreciation of $1,200,000). Southern exchanges this for a building owned by Eastern Company. The building's book value on Eastern's books is $950,000 (original cost of $1,600,000 less accumulated depreciation of $650,000). Eastern also gives Southern $140,000 to complete the exchange. The exchange has commercial s for both companies. Required: Prepare the journal entries to record the exchange on the books of both Southern and Eastern. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) No 1 2 Event 1 2 Answer is complete but not entirely correct. General Journal Building-new Accumulated depreciation Cash Building old Gain on exchange of assets Building new Accumulated depreciation Building old Gain on exchange of assets Cash 40003 30033 Debit 1,400,000 1,200,000 140,000 1,400,000 650,000 Credit 2,000,000 740,000 1,600,000 310,000 140,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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