Crane Company exchanged equipment used in its manufacturing operations plus $3,300 in cash for similar equipment used in the operations of Cheyenne Company. The following information pertains to the exchange. Crane Co. Cheyenne Co. Equipment (cost) $30,800 $30,800 Accumulated depreciation 20,900 11,000 Fair value of equipment 13,750 17,050 Cash given up 3,300 1) Prepare the journal entries to record the exchange on the books of both companies. Assume that the exchange lacks commercial substance. 2) Prepare the journal entries to record the exchange on the books of both companies. Assume that the exchange has commercial substance.
Crane Company exchanged equipment used in its manufacturing operations plus $3,300 in cash for similar equipment used in the operations of Cheyenne Company. The following information pertains to the exchange. Crane Co. Cheyenne Co. Equipment (cost) $30,800 $30,800 Accumulated depreciation 20,900 11,000 Fair value of equipment 13,750 17,050 Cash given up 3,300 1) Prepare the journal entries to record the exchange on the books of both companies. Assume that the exchange lacks commercial substance. 2) Prepare the journal entries to record the exchange on the books of both companies. Assume that the exchange has commercial substance.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Crane Company exchanged equipment used in its manufacturing operations plus $3,300 in cash for similar equipment used in the operations of Cheyenne Company. The following information pertains to the exchange.
|
Crane Co.
|
Cheyenne Co.
|
|||||
|---|---|---|---|---|---|---|
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Equipment (cost)
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$30,800 | $30,800 | ||||
|
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20,900 | 11,000 | ||||
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Fair value of equipment
|
13,750 | 17,050 | ||||
|
Cash given up
|
3,300 |
1) Prepare the
2) Prepare the journal entries to record the exchange on the books of both companies. Assume that the exchange has commercial substance.
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