Property, Plant, and Equipment: Property, Plant, and Equipment refers to the fixed assets, having a useful life of more than a year that is acquired by a company to be used in its business activities, for generating revenue. To Prepare: The journal entries to record the exchange on the books of Company S.

Question

Want to see more full solutions like this?

Answer 1

Question

Chapter 10, Problem 10.6P

To determine

Property, Plant, and Equipment:

Property, Plant, and Equipment refers to the fixed assets, having a useful life of more than a year that is acquired by a company to be used in its business activities, for generating revenue.

To Prepare: The journal entries to record the exchange on the books of Company S.

Expert Solution & Answer

Explanation of Solution

Date	Account Title and Explanation	Post Ref.	Debit ($)	Credit ($)
	Cash		140,000
	New Building		1,260,000
	Accumulated depreciation – Old building		1,200,000
	Old Building			2,000,000
	Gain on exchange of assets			600,000
	(To record the exchange on the books of R Company.)

Table (1)

Working note:

Determine the value of new building.

Value of building = Fair value (Building)−Cash paid= $1,400,000–$140,000=$1,260,000

Determine the gain on exchange of assets.

Gain on exchange of asset = ((Fair value of Company S's asset)−(Original cost of Company S's asset − Accumulated depreciation) )= ($1,400,000)–($2,000,000–$1,200,000)=$1,400,000−$800,000=$600,000

Cash is an asset account, and increased. Therefore, debit Cash account with $140,000.
New Building increases the asset account. Hence, debit New Equipment account with $1,260,000.
Accumulated depreciation – old asset is a contra asset. It increases the value of asset account. Therefore, debit Accumulated Depreciation with $1,200,000.
Old Building is an asset account, and decreased. Therefore, credit Old Equipment account with $2,000,000.
Gain on sale of exchange of assets increases the equity by $10,000. Hence, credit Gain on sale of exchange of assets with $600,000.

Prepare the journal entries to record the exchange on the books of Company E.

Date	Account Title and Explanation	Post Ref.	Debit ($)	Credit ($)
	New Building		1,400,000
	Accumulated depreciation – Old Building		650,000
	Cash			140,000
	Old Building			1,600,000
	Gain on exchange of buildings			310,000
	(To record the exchange on the books of P Company.)

Table (2)

Working note:

Determine the value of new building.

Value of building = Fair value (Building)+Cash paid= $1,260,000+$140,000=$1,400,000

Determine the gain on exchange of buildings.

Gain on exchange of buildings = ((Fair value of Company E's asset)−(Original cost of Company E's asset − Accumulated depreciation) )= ($1,260,000)–($1,600,000–$650,000)=$1,260,000−$950,000=$310,000

New Building increases the asset account. Hence, debit New Equipment account with $1,400,000.
Accumulated depreciation – old asset is a contra asset. It increases the value of asset account. Therefore, debit Accumulated Depreciation with $650,000.
Cash is an asset account and decreased. Therefore, credit Cash account with $140,000.
Old Building is an asset account, and decreased. Therefore, credit Old Equipment account with $1,600,000.
Gain on exchange of buildings increases the equity by $310,000. Hence, credit Gain on exchange of buildings with $310,000.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Students have asked these similar questions

Hw.27. Entity A entered into a sale and repurchase agreement for its head office on 1 January 2022, selling the office to Bank B for $78,560,000. On the same date, the head office had a fair value of $97,800,000. Entity A will continue to use the head office for the next 2 years and has the option to buy back the property for $93,765,779, based on an effective interest rate of 9.25% per year over the next 2 years. Property prices are expected to increase over the next 2 years. REQUIRED: Measure the net amount to be shown in the Statement of Profit or Loss for the year ended 31 December 2022. 1. $7,938,979 Expense 2. $19,240,000 Expense 3. $0 4. $7,266,800 Expense 5. None of them.

1. Payor Inc. and Recipient Co. have an exchange with no commercial substance. The asset given up by Payor Inc. has a book value of P12,000 and a fair value of P15,000. The asset given up by Recipient Co. has a book value of P20,000 and a fair value of P19,000. Boot of P4,000 is received by Recipient Co. Recipient Co. should record the asset received at Group of answer choices P16,000 P19,000 P15,000 P20,000

Aa.18. Mikkeli OY acquired a brand name with an indefinite life in 2021 for 42,600 markkas. At December 31, 2020, the brand name could be sold for 35,600 markkas, with zero costs to sell. Expected cash flows from the continued use of the brand are 44,870 markkas, and the present value of this amount is 34,600 markkas. Assume that Mikkeli OY is a foreign company using IFRS and is owned by a company using U.S. GAAP. Thus, IFRS balances must be converted to U.S. GAAP to prepare consolidated financial statements. Ignore income taxes. Required: a. Prepare journal entries for this brand name for the year ending December 31, 2020, under (1) IFRS and (2) U.S. GAAP. b. Prepare the entry(ies) that the U.S. parent would make on the December 31, 2020 conversion worksheet to convert IFRS balances to U.S. GAAP.

Answer 2

Question

Chapter 10, Problem 10.6P

To determine

Property, Plant, and Equipment:

Property, Plant, and Equipment refers to the fixed assets, having a useful life of more than a year that is acquired by a company to be used in its business activities, for generating revenue.

To Prepare: The journal entries to record the exchange on the books of Company S.

Expert Solution & Answer

Explanation of Solution

Date	Account Title and Explanation	Post Ref.	Debit ($)	Credit ($)
	Cash		140,000
	New Building		1,260,000
	Accumulated depreciation – Old building		1,200,000
	Old Building			2,000,000
	Gain on exchange of assets			600,000
	(To record the exchange on the books of R Company.)

Table (1)

Working note:

Determine the value of new building.

Value of building = Fair value (Building)−Cash paid= $1,400,000–$140,000=$1,260,000

Determine the gain on exchange of assets.

Gain on exchange of asset = ((Fair value of Company S's asset)−(Original cost of Company S's asset − Accumulated depreciation) )= ($1,400,000)–($2,000,000–$1,200,000)=$1,400,000−$800,000=$600,000

Cash is an asset account, and increased. Therefore, debit Cash account with $140,000.
New Building increases the asset account. Hence, debit New Equipment account with $1,260,000.
Accumulated depreciation – old asset is a contra asset. It increases the value of asset account. Therefore, debit Accumulated Depreciation with $1,200,000.
Old Building is an asset account, and decreased. Therefore, credit Old Equipment account with $2,000,000.
Gain on sale of exchange of assets increases the equity by $10,000. Hence, credit Gain on sale of exchange of assets with $600,000.

Prepare the journal entries to record the exchange on the books of Company E.

Date	Account Title and Explanation	Post Ref.	Debit ($)	Credit ($)
	New Building		1,400,000
	Accumulated depreciation – Old Building		650,000
	Cash			140,000
	Old Building			1,600,000
	Gain on exchange of buildings			310,000
	(To record the exchange on the books of P Company.)

Table (2)

Working note:

Determine the value of new building.

Value of building = Fair value (Building)+Cash paid= $1,260,000+$140,000=$1,400,000

Determine the gain on exchange of buildings.

Gain on exchange of buildings = ((Fair value of Company E's asset)−(Original cost of Company E's asset − Accumulated depreciation) )= ($1,260,000)–($1,600,000–$650,000)=$1,260,000−$950,000=$310,000

New Building increases the asset account. Hence, debit New Equipment account with $1,400,000.
Accumulated depreciation – old asset is a contra asset. It increases the value of asset account. Therefore, debit Accumulated Depreciation with $650,000.
Cash is an asset account and decreased. Therefore, credit Cash account with $140,000.
Old Building is an asset account, and decreased. Therefore, credit Old Equipment account with $1,600,000.
Gain on exchange of buildings increases the equity by $310,000. Hence, credit Gain on exchange of buildings with $310,000.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 3

Question

Chapter 10, Problem 10.6P

To determine

Property, Plant, and Equipment:

Property, Plant, and Equipment refers to the fixed assets, having a useful life of more than a year that is acquired by a company to be used in its business activities, for generating revenue.

To Prepare: The journal entries to record the exchange on the books of Company S.

Expert Solution & Answer

Explanation of Solution

Date	Account Title and Explanation	Post Ref.	Debit ($)	Credit ($)
	Cash		140,000
	New Building		1,260,000
	Accumulated depreciation – Old building		1,200,000
	Old Building			2,000,000
	Gain on exchange of assets			600,000
	(To record the exchange on the books of R Company.)

Table (1)

Working note:

Determine the value of new building.

Value of building = Fair value (Building)−Cash paid= $1,400,000–$140,000=$1,260,000

Determine the gain on exchange of assets.

Gain on exchange of asset = ((Fair value of Company S's asset)−(Original cost of Company S's asset − Accumulated depreciation) )= ($1,400,000)–($2,000,000–$1,200,000)=$1,400,000−$800,000=$600,000

Cash is an asset account, and increased. Therefore, debit Cash account with $140,000.
New Building increases the asset account. Hence, debit New Equipment account with $1,260,000.
Accumulated depreciation – old asset is a contra asset. It increases the value of asset account. Therefore, debit Accumulated Depreciation with $1,200,000.
Old Building is an asset account, and decreased. Therefore, credit Old Equipment account with $2,000,000.
Gain on sale of exchange of assets increases the equity by $10,000. Hence, credit Gain on sale of exchange of assets with $600,000.

Prepare the journal entries to record the exchange on the books of Company E.

Date	Account Title and Explanation	Post Ref.	Debit ($)	Credit ($)
	New Building		1,400,000
	Accumulated depreciation – Old Building		650,000
	Cash			140,000
	Old Building			1,600,000
	Gain on exchange of buildings			310,000
	(To record the exchange on the books of P Company.)

Table (2)

Working note:

Determine the value of new building.

Value of building = Fair value (Building)+Cash paid= $1,260,000+$140,000=$1,400,000

Determine the gain on exchange of buildings.

Gain on exchange of buildings = ((Fair value of Company E's asset)−(Original cost of Company E's asset − Accumulated depreciation) )= ($1,260,000)–($1,600,000–$650,000)=$1,260,000−$950,000=$310,000

New Building increases the asset account. Hence, debit New Equipment account with $1,400,000.
Accumulated depreciation – old asset is a contra asset. It increases the value of asset account. Therefore, debit Accumulated Depreciation with $650,000.
Cash is an asset account and decreased. Therefore, credit Cash account with $140,000.
Old Building is an asset account, and decreased. Therefore, credit Old Equipment account with $1,600,000.
Gain on exchange of buildings increases the equity by $310,000. Hence, credit Gain on exchange of buildings with $310,000.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Chapter 10, Problem 10.6P

To determine

Property, Plant, and Equipment:

Property, Plant, and Equipment refers to the fixed assets, having a useful life of more than a year that is acquired by a company to be used in its business activities, for generating revenue.

To Prepare: The journal entries to record the exchange on the books of Company S.

Expert Solution & Answer

Explanation of Solution

Date	Account Title and Explanation	Post Ref.	Debit ($)	Credit ($)
	Cash		140,000
	New Building		1,260,000
	Accumulated depreciation – Old building		1,200,000
	Old Building			2,000,000
	Gain on exchange of assets			600,000
	(To record the exchange on the books of R Company.)

Table (1)

Working note:

Determine the value of new building.

Value of building = Fair value (Building)−Cash paid= $1,400,000–$140,000=$1,260,000

Determine the gain on exchange of assets.

Gain on exchange of asset = ((Fair value of Company S's asset)−(Original cost of Company S's asset − Accumulated depreciation) )= ($1,400,000)–($2,000,000–$1,200,000)=$1,400,000−$800,000=$600,000

Cash is an asset account, and increased. Therefore, debit Cash account with $140,000.
New Building increases the asset account. Hence, debit New Equipment account with $1,260,000.
Accumulated depreciation – old asset is a contra asset. It increases the value of asset account. Therefore, debit Accumulated Depreciation with $1,200,000.
Old Building is an asset account, and decreased. Therefore, credit Old Equipment account with $2,000,000.
Gain on sale of exchange of assets increases the equity by $10,000. Hence, credit Gain on sale of exchange of assets with $600,000.

Prepare the journal entries to record the exchange on the books of Company E.

Date	Account Title and Explanation	Post Ref.	Debit ($)	Credit ($)
	New Building		1,400,000
	Accumulated depreciation – Old Building		650,000
	Cash			140,000
	Old Building			1,600,000
	Gain on exchange of buildings			310,000
	(To record the exchange on the books of P Company.)

Table (2)

Working note:

Determine the value of new building.

Value of building = Fair value (Building)+Cash paid= $1,260,000+$140,000=$1,400,000

Determine the gain on exchange of buildings.

Gain on exchange of buildings = ((Fair value of Company E's asset)−(Original cost of Company E's asset − Accumulated depreciation) )= ($1,260,000)–($1,600,000–$650,000)=$1,260,000−$950,000=$310,000

New Building increases the asset account. Hence, debit New Equipment account with $1,400,000.
Accumulated depreciation – old asset is a contra asset. It increases the value of asset account. Therefore, debit Accumulated Depreciation with $650,000.
Cash is an asset account and decreased. Therefore, credit Cash account with $140,000.
Old Building is an asset account, and decreased. Therefore, credit Old Equipment account with $1,600,000.
Gain on exchange of buildings increases the equity by $310,000. Hence, credit Gain on exchange of buildings with $310,000.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 10, Problem 10.6P

To determine

Property, Plant, and Equipment:

Property, Plant, and Equipment refers to the fixed assets, having a useful life of more than a year that is acquired by a company to be used in its business activities, for generating revenue.

To Prepare: The journal entries to record the exchange on the books of Company S.

Expert Solution & Answer

Explanation of Solution

Date	Account Title and Explanation	Post Ref.	Debit ($)	Credit ($)
	Cash		140,000
	New Building		1,260,000
	Accumulated depreciation – Old building		1,200,000
	Old Building			2,000,000
	Gain on exchange of assets			600,000
	(To record the exchange on the books of R Company.)

Table (1)

Working note:

Determine the value of new building.

Value of building = Fair value (Building)−Cash paid= $1,400,000–$140,000=$1,260,000

Determine the gain on exchange of assets.

Gain on exchange of asset = ((Fair value of Company S's asset)−(Original cost of Company S's asset − Accumulated depreciation) )= ($1,400,000)–($2,000,000–$1,200,000)=$1,400,000−$800,000=$600,000

Cash is an asset account, and increased. Therefore, debit Cash account with $140,000.
New Building increases the asset account. Hence, debit New Equipment account with $1,260,000.
Accumulated depreciation – old asset is a contra asset. It increases the value of asset account. Therefore, debit Accumulated Depreciation with $1,200,000.
Old Building is an asset account, and decreased. Therefore, credit Old Equipment account with $2,000,000.
Gain on sale of exchange of assets increases the equity by $10,000. Hence, credit Gain on sale of exchange of assets with $600,000.

Prepare the journal entries to record the exchange on the books of Company E.

Date	Account Title and Explanation	Post Ref.	Debit ($)	Credit ($)
	New Building		1,400,000
	Accumulated depreciation – Old Building		650,000
	Cash			140,000
	Old Building			1,600,000
	Gain on exchange of buildings			310,000
	(To record the exchange on the books of P Company.)

Table (2)

Working note:

Determine the value of new building.

Value of building = Fair value (Building)+Cash paid= $1,260,000+$140,000=$1,400,000

Determine the gain on exchange of buildings.

Gain on exchange of buildings = ((Fair value of Company E's asset)−(Original cost of Company E's asset − Accumulated depreciation) )= ($1,260,000)–($1,600,000–$650,000)=$1,260,000−$950,000=$310,000

New Building increases the asset account. Hence, debit New Equipment account with $1,400,000.
Accumulated depreciation – old asset is a contra asset. It increases the value of asset account. Therefore, debit Accumulated Depreciation with $650,000.
Cash is an asset account and decreased. Therefore, credit Cash account with $140,000.
Old Building is an asset account, and decreased. Therefore, credit Old Equipment account with $1,600,000.
Gain on exchange of buildings increases the equity by $310,000. Hence, credit Gain on exchange of buildings with $310,000.

Answer 6

Chapter 10, Problem 10.6P

To determine

Property, Plant, and Equipment:

Property, Plant, and Equipment refers to the fixed assets, having a useful life of more than a year that is acquired by a company to be used in its business activities, for generating revenue.

To Prepare: The journal entries to record the exchange on the books of Company S.

Expert Solution & Answer

Explanation of Solution

Date	Account Title and Explanation	Post Ref.	Debit ($)	Credit ($)
	Cash		140,000
	New Building		1,260,000
	Accumulated depreciation – Old building		1,200,000
	Old Building			2,000,000
	Gain on exchange of assets			600,000
	(To record the exchange on the books of R Company.)

Table (1)

Working note:

Determine the value of new building.

Value of building = Fair value (Building)−Cash paid= $1,400,000–$140,000=$1,260,000

Determine the gain on exchange of assets.

Gain on exchange of asset = ((Fair value of Company S's asset)−(Original cost of Company S's asset − Accumulated depreciation) )= ($1,400,000)–($2,000,000–$1,200,000)=$1,400,000−$800,000=$600,000

Cash is an asset account, and increased. Therefore, debit Cash account with $140,000.
New Building increases the asset account. Hence, debit New Equipment account with $1,260,000.
Accumulated depreciation – old asset is a contra asset. It increases the value of asset account. Therefore, debit Accumulated Depreciation with $1,200,000.
Old Building is an asset account, and decreased. Therefore, credit Old Equipment account with $2,000,000.
Gain on sale of exchange of assets increases the equity by $10,000. Hence, credit Gain on sale of exchange of assets with $600,000.

Prepare the journal entries to record the exchange on the books of Company E.

Date	Account Title and Explanation	Post Ref.	Debit ($)	Credit ($)
	New Building		1,400,000
	Accumulated depreciation – Old Building		650,000
	Cash			140,000
	Old Building			1,600,000
	Gain on exchange of buildings			310,000
	(To record the exchange on the books of P Company.)

Table (2)

Working note:

Determine the value of new building.

Value of building = Fair value (Building)+Cash paid= $1,260,000+$140,000=$1,400,000

Determine the gain on exchange of buildings.

Gain on exchange of buildings = ((Fair value of Company E's asset)−(Original cost of Company E's asset − Accumulated depreciation) )= ($1,260,000)–($1,600,000–$650,000)=$1,260,000−$950,000=$310,000

New Building increases the asset account. Hence, debit New Equipment account with $1,400,000.
Accumulated depreciation – old asset is a contra asset. It increases the value of asset account. Therefore, debit Accumulated Depreciation with $650,000.
Cash is an asset account and decreased. Therefore, credit Cash account with $140,000.
Old Building is an asset account, and decreased. Therefore, credit Old Equipment account with $1,600,000.
Gain on exchange of buildings increases the equity by $310,000. Hence, credit Gain on exchange of buildings with $310,000.

Answer 7

Chapter 10, Problem 10.6P

To determine

Property, Plant, and Equipment:

Property, Plant, and Equipment refers to the fixed assets, having a useful life of more than a year that is acquired by a company to be used in its business activities, for generating revenue.

To Prepare: The journal entries to record the exchange on the books of Company S.

Answer 8

Expert Solution & Answer

Explanation of Solution

Date	Account Title and Explanation	Post Ref.	Debit ($)	Credit ($)
	Cash		140,000
	New Building		1,260,000
	Accumulated depreciation – Old building		1,200,000
	Old Building			2,000,000
	Gain on exchange of assets			600,000
	(To record the exchange on the books of R Company.)

Table (1)

Working note:

Determine the value of new building.

Value of building = Fair value (Building)−Cash paid= $1,400,000–$140,000=$1,260,000

Determine the gain on exchange of assets.

Gain on exchange of asset = ((Fair value of Company S's asset)−(Original cost of Company S's asset − Accumulated depreciation) )= ($1,400,000)–($2,000,000–$1,200,000)=$1,400,000−$800,000=$600,000

Cash is an asset account, and increased. Therefore, debit Cash account with $140,000.
New Building increases the asset account. Hence, debit New Equipment account with $1,260,000.
Accumulated depreciation – old asset is a contra asset. It increases the value of asset account. Therefore, debit Accumulated Depreciation with $1,200,000.
Old Building is an asset account, and decreased. Therefore, credit Old Equipment account with $2,000,000.
Gain on sale of exchange of assets increases the equity by $10,000. Hence, credit Gain on sale of exchange of assets with $600,000.

Prepare the journal entries to record the exchange on the books of Company E.

Date	Account Title and Explanation	Post Ref.	Debit ($)	Credit ($)
	New Building		1,400,000
	Accumulated depreciation – Old Building		650,000
	Cash			140,000
	Old Building			1,600,000
	Gain on exchange of buildings			310,000
	(To record the exchange on the books of P Company.)

Table (2)

Working note:

Determine the value of new building.

Value of building = Fair value (Building)+Cash paid= $1,260,000+$140,000=$1,400,000

Determine the gain on exchange of buildings.

Gain on exchange of buildings = ((Fair value of Company E's asset)−(Original cost of Company E's asset − Accumulated depreciation) )= ($1,260,000)–($1,600,000–$650,000)=$1,260,000−$950,000=$310,000

New Building increases the asset account. Hence, debit New Equipment account with $1,400,000.
Accumulated depreciation – old asset is a contra asset. It increases the value of asset account. Therefore, debit Accumulated Depreciation with $650,000.
Cash is an asset account and decreased. Therefore, credit Cash account with $140,000.
Old Building is an asset account, and decreased. Therefore, credit Old Equipment account with $1,600,000.
Gain on exchange of buildings increases the equity by $310,000. Hence, credit Gain on exchange of buildings with $310,000.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Ch. 10 - Prob. 10.1Q Ch. 10 - Prob. 10.2Q Ch. 10 - Prob. 10.3Q Ch. 10 - Prob. 10.4Q Ch. 10 - Prob. 10.5Q Ch. 10 - Prob. 10.6Q Ch. 10 - When an asset is acquired and a note payable is...Ch. 10 - Explain how assets acquired in exchange for equity...Ch. 10 - Prob. 10.9Q Ch. 10 - What account is credited when a company receives...

Solution Summary: The author explains that property, plant, and equipment refers to the fixed assets that are acquired by a company to be used in its business activities, for generating revenue.

Explanation of Solution

Want to see more full solutions like this?

Chapter 10 Solutions