Athens Inc. exchanged machinery with an appraised value of $ 1,170,000, a recorded cost of $1,800,000 and accumulated depreciation of $900,000, for machinery that Sparta Corp. owns. Sparta's machinery has an appraised value of $1,140,000, a recorded cost of $ 2,160,000, and accumulated depreciation of $ 1,188,000. Sparta also gave Athens $ 30,000 in the exchange. Assume depreciation has been updated to the date of exchange. Required: a ) Prepare the entries on both companies' books assuming that the transaction has commercial substance. b) Prepare the entries on both companies' books assuming that the transaction lacks commercial substance.

Athens Inc. exchanged machinery with an appraised value of $ 1,170,000, a recorded cost of $1,800,000 and accumulated depreciation of $900,000, for machinery that Sparta Corp. owns. Sparta's machinery has an appraised value of $1,140,000, a recorded cost of $ 2,160,000, and accumulated depreciation of $ 1,188,000. Sparta also gave Athens $ 30,000 in the exchange. Assume depreciation has been updated to the date of exchange. Required: a ) Prepare the entries on both companies' books assuming that the transaction has commercial substance. b) Prepare the entries on both companies' books assuming that the transaction lacks commercial substance.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Given that im) 0.1488144 and d(m) = 0.1417814, find m. 5.
Apple Juice Corp plans to take up a project that will cost $150,000 of investment in Building and $80,000 in new machinery. Apple Juice Corp has already spent $8000 on research and analysis about the products that will be developed in this unit. By taking up this project, Apple Juice Corp. estimates additional cash flows of $85000 per annum for the next five years. COGS are expected to be 40% of the revenues, SG&A will be 4% of the revenues. This project will require an additional inventory of $60,000 and an increase in payables by $25000 Tax Rate is 20% The target Debt: Equity is 1:4 Cost of new debt: 6% Cost of Equity: Need to calculate using the beta of 0.9, Rf of 4%, and market risk premium of 6% The equipment that would be used has a 3-year tax life. Under the new tax law, the equipment used in the project is eligible for 100% bonus depreciation, so it will be fully depreciated at t = 0. The Salvage value of Building and Machinery after 5 years is $100,000. You, as a financial…
D Question 19 Find the value of the improper integral. ₁ da The Integral Diverges 3/4 03/2 12
Section 1250 summary
two questions
E12.17
You put 491-28 why is it 28 and not - 175?? Can you explain that please?
LO 7.4 Name the four main special journals.
Activity 3.5.2.
it say 1.33 is incorrect
5 basic of pulic sector ethics
A. For what values of x is f(x) NOT y 00 6 4 2 X -3-2-10 1 2 3 4 5