Clark Co. and Keys Inc. exchange equipment. Information related to this exchange follows. Clark Keys Co. 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.

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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Reporting an Asset Exchange
Clark Co. and Keys Inc. exchange equipment. Information related to this exchange follows.
Keys
Inc.
Equipment given up:
Equipment (original cost) $60,000 $70,000
Accumulated depreciation 20,000 24,000
Fair value
36,000 48,000
12,000
Cash exchanged
(12,000)
Clark
Co.
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.
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.
Exchange has Commercial Substance Exchange Lacks Commercial Substance
Account Name
To record acquisition of equipment.
To record acquisition of equipment.
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Transcribed Image Text:Reporting an Asset Exchange Clark Co. and Keys Inc. exchange equipment. Information related to this exchange follows. Keys Inc. Equipment given up: Equipment (original cost) $60,000 $70,000 Accumulated depreciation 20,000 24,000 Fair value 36,000 48,000 12,000 Cash exchanged (12,000) Clark Co. 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. 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. Exchange has Commercial Substance Exchange Lacks Commercial Substance Account Name To record acquisition of equipment. To record acquisition of equipment. くく くく く > > > Dr. 0 0 0 0 0 0 0 0 0 0 Cr. 0 0 0 0 0 0 0 0 0 0
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.
C.
Exchange has Commercial Substance Exchange Lacks Commercial Substance
d.
Account Name
To record acquisition of equipment.
To record acquisition of equipment.
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Transcribed Image Text: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. C. Exchange has Commercial Substance Exchange Lacks Commercial Substance d. Account Name To record acquisition of equipment. To record acquisition of equipment. > < > Dr. 0 0 0 0 0 0 0 0 0 0 Cr. 0 0 0 O 0 0 0 0 0 0
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