Intermediate Accounting
1st Edition
ISBN: 9780132162302
Author: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella
Publisher: PEARSON
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Chapter 11, Problem 11.33E
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In October, Dean Company exchanged an old packing machine costing P240,000 and 50% depreciated, for a dissimilar used machine and paid a cash difference of P32,000. The market value of the old packaging machine was determined to be P140,000. How much is the cost of the newly acquired machine and the amount of gain or loss, respectively, that Dean should record on this exchange?
China Inn and Midwest Chicken exchanged assets. Midwest Chicken received equipment and gave a delivery truck. The fair value and book value of the delivery truck given were $31,000 and $32,600 (original cost of $37,000 less accumulated depreciation of $4,400), respectively. To equalize market values of the exchanged assets, Midwest Chicken received $9,000 in cash from China Inn. At what amount did Midwest Chicken record the equipment? How much gain or loss did Midwest Chicken recognize on the exchange?
CAKE Corporation exchanged a piece of equipment for new equipment. Data pertaining to the old equipment follows: Cost-P500,000; Accumulated Depreciation, P300,000; Fair value of old equipment, P180,000. The fair value of the new equipment is P230,000 and CAKE Corporation paid P50,000 to complete the exchange transaction. Assuming the configuration of the cash flows of the equipment is significantly different, how much is the gain or loss on exchange?
Chapter 11 Solutions
Intermediate Accounting
Ch. 11 - Stephen J. Cosgrove is the Former Vice President....Ch. 11 - Prob. 11.2QCh. 11 - Prob. 11.3QCh. 11 - Prob. 11.4QCh. 11 - Will the expense/capitalization choice impact...Ch. 11 - Prob. 11.6QCh. 11 - Prob. 11.7QCh. 11 - For a long-lived operating asset acquired by...Ch. 11 - Prob. 11.9QCh. 11 - Prob. 11.10Q
Ch. 11 - Prob. 11.11QCh. 11 - What is the maximum amount of interest to be...Ch. 11 - Prob. 11.13QCh. 11 - Prob. 11.14QCh. 11 - Prob. 11.15QCh. 11 - Do firms expense all costs incurred after the...Ch. 11 - Prob. 11.17QCh. 11 - Prob. 11.18QCh. 11 - When using the double-declining balance...Ch. 11 - Prob. 11.20QCh. 11 - Will a firm recognize a loss on the income...Ch. 11 - Prob. 11.22QCh. 11 - Prob. 11.23QCh. 11 - Prob. 11.24QCh. 11 - Prob. 11.25QCh. 11 - Prob. 11.26QCh. 11 - Prob. 11.27QCh. 11 - Prob. 11.28QCh. 11 - Prob. 11.29QCh. 11 - Prob. 11.30QCh. 11 - Prob. 11.31QCh. 11 - Prob. 11.32QCh. 11 - Prob. 11.33QCh. 11 - Prob. 11.34QCh. 11 - Prob. 11.35QCh. 11 - In a nonmonetary exchange does a firm record the...Ch. 11 - Prob. 11.37QCh. 11 - Prob. 11.38QCh. 11 - Prob. 11.39QCh. 11 - Prob. 11.40QCh. 11 - Prob. 11.1MCCh. 11 - On January 1, Year 1, Bluebird Inc. borrowed 10...Ch. 11 - Prob. 11.3MCCh. 11 - Prob. 11.4MCCh. 11 - Prob. 11.5MCCh. 11 - Prob. 11.6MCCh. 11 - Prob. 11.7MCCh. 11 - Prob. 11.8MCCh. 11 - Determining Acquisition Cost. Haply, Inc. incurred...Ch. 11 - Determining Acquisition Cost. Tarpley, Inc....Ch. 11 - Prob. 11.3BECh. 11 - Prob. 11.4BECh. 11 - Prob. 11.5BECh. 11 - Prob. 11.6BECh. 11 - Prob. 11.7BECh. 11 - Prob. 11.8BECh. 11 - Depreciation, Straight-Line Method. Hermit...Ch. 11 - Prob. 11.10BECh. 11 - Prob. 11.11BECh. 11 - Prob. 11.12BECh. 11 - Prob. 11.13BECh. 11 - Derecognition Due to Abandonment. Greene Corp....Ch. 11 - Prob. 11.15BECh. 11 - Prob. 11.16BECh. 11 - Prob. 11.17BECh. 11 - Prob. 11.18BECh. 11 - Prob. 11.19BECh. 11 - Prob. 11.20BECh. 11 - Leasehold Improvements. At the beginning of its...Ch. 11 - Determining Acquisition Cost. St Charles Flooring...Ch. 11 - Prob. 11.2ECh. 11 - Prob. 11.3ECh. 11 - Prob. 11.4ECh. 11 - Prob. 11.5ECh. 11 - Prob. 11.6ECh. 11 - Capitalization of Interest, Specific and General...Ch. 11 - Prob. 11.8ECh. 11 - Prob. 11.9ECh. 11 - Capitalization of Interest, Specific and General...Ch. 11 - Prob. 11.11ECh. 11 - Expensing versus Capitalizing ExpendituresAnalysis...Ch. 11 - Depreciation Methods, Disposal. Kurtis Koal...Ch. 11 - Prob. 11.14ECh. 11 - Depreciation Methods, Partial-Year Depreciation....Ch. 11 - Prob. 11.16ECh. 11 - Depreciation Methods. Ace Manufacturing, Inc....Ch. 11 - Prob. 11.18ECh. 11 - Depreciation Methods, Partial-Year Depreciation,...Ch. 11 - Prob. 11.20ECh. 11 - Partial-Year Depreciation, Sale of Property,...Ch. 11 - Prob. 11.22ECh. 11 - Disclosure of Property, Plant, and Equipment. Use...Ch. 11 - Disclosure of Property, Plant, and Equipment,...Ch. 11 - Prob. 11.25ECh. 11 - Research and Development Activities. During the...Ch. 11 - Prob. 11.27ECh. 11 - Goodwill Computation, Acquisition of Intangibles,...Ch. 11 - Prob. 11.29ECh. 11 - Prob. 11.30ECh. 11 - Prob. 11.31ECh. 11 - Prob. 11.32ECh. 11 - Prob. 11.33ECh. 11 - Prob. 11.34ECh. 11 - Prob. 11.35ECh. 11 - Prob. 11.36ECh. 11 - Prob. 11.37ECh. 11 - Exchanges Lacking Commercial Substance, Cash...Ch. 11 - Prob. 11.39ECh. 11 - Prob. 11.41ECh. 11 - Prob. 11.42ECh. 11 - Note Payable Exchanged for a Plant Asset (Deferred...Ch. 11 - Prob. 11.2PCh. 11 - Prob. 11.3PCh. 11 - Depreciation Methods and Depreciation Schedules....Ch. 11 - Prob. 11.5PCh. 11 - Prob. 11.6PCh. 11 - Goodwill and Bargain Purchase Computations. The...Ch. 11 - Prob. 11.8PCh. 11 - Prob. 11.9PCh. 11 - Prob. 11.10PCh. 11 - Prob. 11.11PCh. 11 - Judgment Case 1: Property, Plant, and Equipment:...Ch. 11 - Prob. 2JCCh. 11 - Prob. 1FSACCh. 11 - Surfing the Standards Cases Surfing the Standards...Ch. 11 - Prob. 2SSCCh. 11 - Surfing the Standards Case 3: Involuntary...Ch. 11 - Prob. 4SSCCh. 11 - Prob. 5SSCCh. 11 - Prob. 6SSCCh. 11 - Prob. 1BCCCh. 11 - Prob. 2BCC
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- 3. The company had the following transactions or events during the year: The company paid $100,000 to exchange an old equipment for a new equipment.The cost and accumulated depreciation of the old equipment were $500,000 and $260,000, respectively. The fair value of the old equipment was $300,000, while the fair value of the new equipment was $450,000. This exchange had commercial substance. The old machinery with the original cost of $5,000 and accumulated depreciation of $4,800 was exchanged for a new machinery.The company paid $6,000 for the new machinery. This exchange did not have commercial substance. The company purchased an equipment on September 1.The equipment will be dismantled, and the estimated site restoration costs of $50,000 will be incurred after 15 years. The current discount rate is 6%. The company recorded accrued interest on this asset retirement liability on December 31. (P/F,6%,15) =0.41727, i.e., the present value of $1 at the discount rate of 6% for 15…arrow_forwardAlamos Co. exchanged equipment and $17,000 cash for similar equipment. The book value and the fair value of the old equipment were $80,700 and $90,700, respectively. Assuming that the exchange has commercial substance, Alamos would record a gain/(loss) of:arrow_forwardRain Company traded a manual weather machine for an automated weather machine and gave $40,000 cash. The manual machine cost $495,000, had a net book value of $350,000, and a fair value of $360,000. The automated machine was originally purchased by Shine Company for $510,000 and had a net book value of $430,000. It has a fair market value of $450,000. Determine the value of the asset received for Rain and Shine assuming the exchange does not have commercial substance. Please include the appropriate dollar sign and commas (example $25,000).arrow_forward
- China Inn and Midwest Chicken exchanged assets. China Inn received a delivery truck and gave equipment. The fair value and book value of the equipment were $22,000 and $12,000 (original cost of $45,000 less accumulated depreciation of $33,000), respectively. To equalize market values of the exchanged assets, China Inn paid $9,000 in cash to Midwest Chicken. At what amount did China Inn record the delivery truck? How much gain or loss did China Inn recognize on the exchange?arrow_forwardNorfolk Plc., an IFRS reporter, is revaluing equipment with a carrying value of £984,500 to its fair value of £964,500. The original cost of the equipment was £1,400,000. The equipment has a 10-year useful life and scrap value of £15,000. Norfolk uses straight-line depreciation. Assume that Norfolk eliminates all prior accumulated depreciation and adjusts the historical cost to fair value. a. What is the revaluation surplus or unrealized loss? b. Where does the firm report the revaluation surplus or unrealized loss in the financial statements? c. What are the journal entries to record the revaluation? d. What is the depreciation expense on the equipment after the revaluation? e. Norfolk chooses to take any revaluation surplus to retained earnings over the equipment's remaining useful life. What is the amount of the surplus, if any, taken to retained earnings in the year after revaluation? f. If Norfolksells the equipment at the end of…arrow_forwardHartney Company and Indoy Company had an exchange of productive assets. Hartney Company exchanges a building for Indoy's equipment. The following information are as follows: Hartney (Machine) Indoy (Equipment) Cost of asset exchanged P900,000 P800,000 Accumulated depreciation 540,000 320,000 Fair value of asset exchanged 400,000 350,000 Cash received (paid) 50,000 (50,000) Assuming that the transaction has a commercial substance, how much should Indoy recognize gain/loss in the exchange? (Note: Indicate "( )" if loss)arrow_forward
- Cedric Company recently traded in an older model of equipment for a new model. The old model’s book value was $180,000 (original cost of $400,000 less $220,000 in accumulated depreciation) and its fair value was $200,000. Cedric paid $60,000 to complete the exchange which has commercial substance.Required:Prepare the journal entry to record the exchange.arrow_forwardCalaveras Tire exchanged equipment for two pickup trucks. The book value and fair value of the equipmentwere $20,000 (original cost of $65,000 less accumulated depreciation of $45,000) and $17,000, respectively.Calaveras also paid $8,000 in cash. At what amount will Calaveras value the pickup trucks? How much gain orloss will the company recognize on the exchange? Assume the exchange has commercial substance.arrow_forwardChina Inn and Midwest Chicken exchanged assets. China Inn received delivery equipment and gave restaurant equipment. The fair value and book value of the restaurant equipment were $21,500 and $11,800 (original cost of $44,000 less accumulated depreciation of $32,200), respectively. To equalize market values of the exchanged assets, China Inn paid $8,900 in cash to Midwest Chicken. Record the gain or loss for China Inn on the exchange of the equipment. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.)arrow_forward
- Hot Company exchanges an automobile machine with a carrying amount of $135,000 ( original cost , $550,000) for a molding machine owned by Water Company. The molding machine is carried in Water's Company books at a cost of $240,000 with an accumulated depreciation of $83,000 at the time of exchange. Assume that no cash is involved in the transaction, and the fair value of the automobile is not readily determinable. The fair market value of the molding machine is $172,800. How much is the gain or loss on the exchange of Water Company?arrow_forwardCedric Company recently traded in an older model of equipment for a new model. The old model’s book value was $180,000 (original cost of $400,000 less $220,000 in accumulated depreciation) and its fair value was $170,000. Cedric paid $60,000 to complete the exchange which has commercial substance. Prepare the journal entry to record the exchange.arrow_forwardA company exchanged old equipment and $18,200 cash for similar equipment. The book value and the fair value of the old equipment were $81,000 and $91,800, respectively. Assuming that the exchange has commercial substance, the company would record a gain(loss) of:arrow_forward
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