Yellow Company acquired a delivery truck, making payment of $2,680,000, the payment being analyzed as follows: Price of truck 2,500,000 Charge of extra equipment 50,000 Value added tax 300,000 Insurance for one year 120,000 Motor vehicle registration 10,000 ————— Total 2,980,000 Less: trade in value allowed on old truck 300,000 —————— Cash paid 2,680,000 The old truck cost $1,500,000 and has a carrying amount of $200,000, and fair value of $50,000. The value added tax is refundable or recoverable. Required: Prepare journal entry to record the exchange transaction.

Yellow Company acquired a delivery truck, making payment of $2,680,000, the payment being analyzed as follows: Price of truck 2,500,000 Charge of extra equipment 50,000 Value added tax 300,000 Insurance for one year 120,000 Motor vehicle registration 10,000 ————— Total 2,980,000 Less: trade in value allowed on old truck 300,000 —————— Cash paid 2,680,000 The old truck cost $1,500,000 and has a carrying amount of $200,000, and fair value of $50,000. The value added tax is refundable or recoverable. Required: Prepare journal entry to record the exchange transaction.

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter15: Managing Short-term Assets

Section: Chapter Questions

Problem 11PROB

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