On August 1, Hani, Co. exchanged machinery with Wahran Co. Hani's asset is referred to below as AssetA, and Wahran's is referred to as Asset B. The following facts pertain to these assets.Asset A (Hani)E96,000Asset B (Wahran)£110,00047,00075,000Original costAccumulated depreciation (to date of exchange)Fair value at date of exchangeCash paid by Hani Co.Cash received by Wahran Co.Required:(a) Assuming that the exchange of Assets A and B has commercial substance, record the exchange for40,00060,00015,00015,000both Hani Co. and Wahran Co.(b) Assuming that the exchange of Assets A and B lacks commercial substance, record the exchange forBoth Hyde, Inc. and Wiggins, Inc.

As per IAS-16( Property, Plant and Equipment ) When entity Acquires any Property, Plant and…

(a) Assuming that the exchange of Assets A and B has commercial substance, record the exchange for both Hani Co. and Wahran Co. (b) Assuming that the exchange of Assets A and B lacks commercial substance, record the exchange for Both Hyde, Inc. and Wiggins, Inc.

(a) Assuming that the exchange of Assets A and B has commercial substance, record the exchange for both Hani Co. and Wahran Co. (b) Assuming that the exchange of Assets A and B lacks commercial substance, record the exchange for Both Hyde, Inc. and Wiggins, Inc.

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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Question

On August 1, Hani, Co. exchanged machinery with Wahran Co. Hani's asset is referred to below as Asset
A, and Wahran's is referred to as Asset B. The following facts pertain to these assets.
Asset A (Hani)
E96,000
Asset B (Wahran)
£110,000
47,000
75,000
Original cost
Accumulated depreciation (to date of exchange)
Fair value at date of exchange
Cash paid by Hani Co.
Cash received by Wahran Co.
Required:
(a) Assuming that the exchange of Assets A and B has commercial substance, record the exchange for
40,000
60,000
15,000
15,000
both Hani Co. and Wahran Co.
(b) Assuming that the exchange of Assets A and B lacks commercial substance, record the exchange for
Both Hyde, Inc. and Wiggins, Inc.

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Step 1 Recognition of Property , Plant and Equipment as per IAS -16

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