During the current year, Marshall Construction trades an old crane that has a book value of $90,000 (original cost $140,000 less accumulated depreciation $50,000) for a new crane from Brigham Manufacturing. The new crane cost Brigham $165,000 to manufacture and is classified as inventory. The following information is also available. Marshall Const. Brigham Mfg. Co. Fair value of old crane $ 82,000 Fair value of new chane $ 200,000 Cash paid 118,000 Cash received 118,000 Instructions a. Assuming that this exchange is considered to have commercial substance , prepare the journal entries on the books of (1) Marshall Construction and (2) Brigham Manufacturing b. Assuming that this exchange lacks commercial substance for Marshall, prepare the journal entries on the books of Marshall Construction. c. Assuming the same facts as those in (a) except that the fair value of the old crane is $98,000 and the cash paid is $102,000 , prepare the journal entries on the book of (1) Marshall Construction and (2) Brigham Manufacturing. d. Assuming the same facts as those in (b) except that the fair value of the old crane is $97,000 and the cash paid $103,000, prepare the journal entries on the books of (1) Marshall Construction and (2) Brigham Nanufacturing.
During the current year, Marshall Construction trades an old crane that has a book value of $90,000 (original cost $140,000 less
| Marshall Const. | Brigham Mfg. Co. | |
| Fair value of old crane | $ 82,000 | |
| Fair value of new chane | $ 200,000 | |
| Cash paid | 118,000 | |
| Cash received | 118,000 |
Instructions
a. Assuming that this exchange is considered to have commercial substance , prepare the
b. Assuming that this exchange lacks commercial substance for Marshall, prepare the journal entries on the books of Marshall Construction.
c. Assuming the same facts as those in (a) except that the fair value of the old crane is $98,000 and the cash paid is $102,000 , prepare the journal entries on the book of (1) Marshall Construction and (2) Brigham Manufacturing.
d. Assuming the same facts as those in (b) except that the fair value of the old crane is $97,000 and the cash paid $103,000, prepare the journal entries on the books of (1) Marshall Construction and (2) Brigham Nanufacturing.
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