Alpha Company and Beta, Inc. are both manufacturing companies that use various equipment in their production facilities. The two companies have decided to exchange a piece of equipment currently being used in their operations. Information about each company's equipment and exchange is provided below: REQUIRED: A) B) Cost of Equipment Accumulated Depreciation Fair Market Value Cash Paid in Exchange Cash Received in Exchange Alpha 100,000 (65,000) 50,000 60,000 Beta 150,000 (30,000) 110,000 60,000 Prepare the appropriate journal entry to record the exchange, on each company's books, assuming the exchange lacks commercial substance. Prepare the appropriate journal entry to record the exchange, on each company's books, assuming the exchange has commercial substance.

Alpha Company and Beta, Inc. are both manufacturing companies that use various equipment in their production facilities. The two companies have decided to exchange a piece of equipment currently being used in their operations. Information about each company's equipment and exchange is provided below: REQUIRED: A) B) Cost of Equipment Accumulated Depreciation Fair Market Value Cash Paid in Exchange Cash Received in Exchange Alpha 100,000 (65,000) 50,000 60,000 Beta 150,000 (30,000) 110,000 60,000 Prepare the appropriate journal entry to record the exchange, on each company's books, assuming the exchange lacks commercial substance. Prepare the appropriate journal entry to record the exchange, on each company's books, assuming the exchange has commercial substance.

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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