On August 1, Crane, Inc. exchanged productive assets with Cheyenne, Inc. Crane’s asset is referred to below as “Asset A,” and Cheyenne’ is referred to as “Asset B.” The following facts pertain to these assets. Asset A Asset BOriginal cost $117,120 $134,200Accumulated depreciation (to date of exchange) 48,800 57,340Fair value at date of exchange 73,200 91,500Cash paid by Crane, Inc. 18,300 Cash received by Cheyenne, Inc. 18,300Assuming that the exchange of Assets A and B lacks commercial substance, record the exchange for both Crane, Inc. and Cheyenne, Inc. in accordance with generally accepted accounting principles. Account Titles and ExplanationDebitCreditCrane, Inc.’s Books Cheyenne, Inc.’s Books

An exchange of assets lacking commercial substance occurs when two entities swap assets without…

Answered: Assuming that the exchange of Assets A…

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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On August 1, Crane, Inc. exchanged productive assets with Cheyenne, Inc. Crane’s asset is referred to below as “Asset A,” and Cheyenne’ is referred to as “Asset B.” The following facts pertain to these assets.

	Asset A	Asset B
Original cost	$117,120	$134,200
Accumulated depreciation (to date of exchange)	48,800	57,340
Fair value at date of exchange	73,200	91,500
Cash paid by Crane, Inc.	18,300
Cash received by Cheyenne, Inc.		18,300

Assuming that the exchange of Assets A and B lacks commercial substance, record the exchange for both Crane, Inc. and Cheyenne, Inc. in accordance with generally accepted accounting principles.

Account Titles and Explanation	Debit	Credit
Crane, Inc.’s Books




Cheyenne, Inc.’s Books

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