a) Prepare all required journal entries in good form on the books of both Bracebridge Incorporated and Muskoka Incorporated.
Bracebridge Incorporated and Muskoka Incorporated exchanged equipment, with Muskoka
Incorporated also giving Bracebridge Incorporated $450,000 as part of the exchange. The transaction
lacks commercial substance. A summary of the exchange (which occurred on December 31, 2020) is as
follows:
Equipment Originally Owned by
Bracebridge Incorporated
Equipment Originally Owned by
Muskoka Incorporated
Appraised Value $12,000,000 $11,500,000
Cost $14,000,000 $13,500,000
(at December 31, 2020) $6,500,000 $7,000,000
Required
a) Prepare all required
Incorporated and Muskoka Incorporated.
b) Repeat part (a) but assume the transaction has commercial substance.
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