Beck Company and Train Corporation exchange equipment. Relevant information are as follows: Beck Train Equipment 2,000,000 2,500,000 Accumulated depreciation 1,125,000 1,687,500 Fair value 750,000 1,000,000 Cash payment/(received) 250,000 (250,000) Beck Company also traded an old equipment with a dealer for a newer model. Relevant information are as follows: Old equipment: Cost P1,400,000 Accumulated depreciation 1,000,000 Fair value 350,000 Trade in value 500,000 New equipment: List price P2,000,000 Trade in value of old equipment (500,000) Cash payment P1,500,000 Required 1. Prepare journal entries related to the exchange using the following assumptions: a) Fair value approach b) Trade in value approach
Beck Company and Train Corporation exchange equipment. Relevant information are as follows: Beck Train Equipment 2,000,000 2,500,000 Accumulated depreciation 1,125,000 1,687,500 Fair value 750,000 1,000,000 Cash payment/(received) 250,000 (250,000) Beck Company also traded an old equipment with a dealer for a newer model. Relevant information are as follows: Old equipment: Cost P1,400,000 Accumulated depreciation 1,000,000 Fair value 350,000 Trade in value 500,000 New equipment: List price P2,000,000 Trade in value of old equipment (500,000) Cash payment P1,500,000 Required 1. Prepare journal entries related to the exchange using the following assumptions: a) Fair value approach b) Trade in value approach
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Beck Company and Train Corporation exchange equipment. Relevant information are as follows:
| Beck | Train | |
| Equipment | 2,000,000 | 2,500,000 |
| 1,125,000 | 1,687,500 | |
| Fair value | 750,000 | 1,000,000 |
| Cash payment/(received) | 250,000 | (250,000) |
Beck Company also traded an old equipment with a dealer for a newer model. Relevant information are as follows:
Old equipment:
Cost P1,400,000
Accumulated depreciation 1,000,000
Fair value 350,000
Trade in value 500,000
New equipment:
List price P2,000,000
Trade in value of old equipment (500,000)
Cash payment P1,500,000
Required
1. Prepare
a) Fair value approach
b) Trade in value approach
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