Clark Co. and Keys Inc. exchange equipment. Information related to this exchange follows. Clark Co. Keys Inc. Equipment given up: Equipment (original cost) $60,000 $70,000 Accumulated depreciation 20,000 24,000 Fair value 36,000 48,000 Cash exchanged (12,000) 12,000 Required a. Record the exchange for Clark Co. assuming the transaction has commercial substance. b. Record the exchange for Keys Inc. assuming the transaction has commercial substance. c. Record the exchange for Clark Co. assuming the transaction lacks commercial substance. d. Record the exchange for Keys Inc. assuming the transaction lacks commercial substance. a. Exchange has Commercial Substance a. Record the exchange for Clark Co. assuming the transaction has commercial substance. b. Record the exchange for Keys Inc. assuming the transaction has commercial substance. b. Account Name To record acquisition of equipment. Exchange Lacks Commercial Substance To record acquisition of equipment. Dr. Cr.
Clark Co. and Keys Inc. exchange equipment. Information related to this exchange follows. Clark Co. Keys Inc. Equipment given up: Equipment (original cost) $60,000 $70,000 Accumulated depreciation 20,000 24,000 Fair value 36,000 48,000 Cash exchanged (12,000) 12,000 Required a. Record the exchange for Clark Co. assuming the transaction has commercial substance. b. Record the exchange for Keys Inc. assuming the transaction has commercial substance. c. Record the exchange for Clark Co. assuming the transaction lacks commercial substance. d. Record the exchange for Keys Inc. assuming the transaction lacks commercial substance. a. Exchange has Commercial Substance a. Record the exchange for Clark Co. assuming the transaction has commercial substance. b. Record the exchange for Keys Inc. assuming the transaction has commercial substance. b. Account Name To record acquisition of equipment. Exchange Lacks Commercial Substance To record acquisition of equipment. Dr. Cr.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Ee 58.

Transcribed Image Text:Reporting an Asset Exchange
Clark Co. and Keys Inc. exchange equipment. Information related to this exchange follows.
Clark Co. Keys Inc.
Equipment given up:
Equipment (original cost)
Accumulated depreciation
Fair value
Cash exchanged
Required
a. Record the exchange for Clark Co. assuming the transaction has commercial substance.
b. Record the exchange for Keys Inc. assuming the transaction has commercial substance.
c. Record the exchange for Clark Co. assuming the transaction lacks commercial substance.
d. Record the exchange for Keys Inc. assuming the transaction lacks commercial substance.
$60,000 $70,000
20,000
24,000
36,000 48,000
(12,000)
12,000
a.
b.
Exchange has Commercial Substance
a. Record the exchange for Clark Co. assuming the transaction has commercial substance.
b. Record the exchange for Keys Inc. assuming the transaction has commercial substance.
Account Name
To record acquisition of equipment.
Exchange Lacks Commercial Substance
To record acquisition of equipment.
Dr.
Cr.
Expert Solution

This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps

Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you


Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,

Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,


Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,

Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,

Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON

Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education

Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education