During the current year, Ayayai Construction Ltd. traded an old crane that had a book value of $127,800 (original cost $198,800 less accumulated depreciation $71,000) for a new crane from Pina Manufacturing Inc. The new crane cost Pina $234,300 to manufacture and is classified as inventory. The following information is also available. Fair value of old crane Fair value of new crane Cash paid Cash received Ayayai Const. $116,440 167,560 Pina Mfg. Inc. $284,000 167,560 Assuming that this exchange is considered to have commercial substance, prepare the journal entries on the books of (1) Ayayai Construction and (2) Pina Manufacturing. (Credit account titles are automatically indented when amount is entered. Do not indent

During the current year, Ayayai Construction Ltd. traded an old crane that had a book value of $127,800 (original cost $198,800 less accumulated depreciation $71,000) for a new crane from Pina Manufacturing Inc. The new crane cost Pina $234,300 to manufacture and is classified as inventory. The following information is also available. Fair value of old crane Fair value of new crane Cash paid Cash received Ayayai Const. $116,440 167,560 Pina Mfg. Inc. $284,000 167,560 Assuming that this exchange is considered to have commercial substance, prepare the journal entries on the books of (1) Ayayai Construction and (2) Pina Manufacturing. (Credit account titles are automatically indented when amount is entered. Do not indent

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Required information [The following information applies to the questions displayed below] Case A. Kapono Farms exchanged an old tractor for a newer model. The old tractor had a book value of $20,500 (original cost of $45,000 less accumulated depreciation of $24,500) and a fair value of $10,700. Kapono paid $37,000 cash to complete the exchange. The exchange has commercial substance. Case B. Kapono Farms exchanged 100 acres of farmland for similar land. The farmland given had a book value of $585,000 and a fair value of $870,000. Kapono paid $67,000 cash to complete the exchange. The exchange has commercial substance. Required: 1. What is the amount of gain or loss that Kapono would recognize on the exchange? What is the initial value of the new land? 2. Assume the fair value of the farmland given is $468,000 instead of $870,000. What is the amount of gain or loss that Kapono would recognize on the exchange? What is the initial value of the new land? 3. Assume the same facts as…
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Rain Company traded a manual weather machine for an automated weather machine and gave $40,000 cash. The manual machine cost $495,000, had a net book value of $350,000, and a fair value of $360,000. The automated machine was originally purchased by Shine Company for $510,000 and had a net book value of $430,000. It has a fair market value of $450,000. Determine the value of the asset received for Rain and Shine assuming the exchange does not have commercial substance. Please include the appropriate dollar sign and commas (example $25,000).
Required information [The following information applies to the questions displayed below.] Case A. Kapono Farms exchanged an old tractor for a newer model. The old tractor had a book value of $15,000 (original cost of $34,000 less accumulated depreciation of $19,000) and a fair value of $9,600. Kapono paid $26,000 cash to complete the exchange. The exchange has commercial substance. Case B. Kapono Farms exchanged 100 acres of farmland for similar land. The farmland given had a book value of $530,000 and a fair value of $760,000. Kapono paid $56,000 cash to complete the exchange. The exchange has commercial substance. 1. What is the amount of gain or loss that Kapono would recognize on the exchange of the land? 2. Assume the fair value of the farmland given is $424,000 instead of $760,000. What is the amount of gain or loss that Kapono would recognize on the exchange? What is the initial value of the new land? 3. Assume the same facts as Requirement 1 and that the exchange lacked…