E9.20 (LO 3) (Nonmonetary Exchange) Arruza Company exchanged equipment used in its manufacturing operations plus $3,000 in cash for similar equipment used in the operations of LoBianco Company. The following information pertains to the exchange. Equipment (cost) Accumulated depreciation. Fair value of equipment Cash given up Arruza Co. $28,000 19,000 12,500 3,000 LoBianco Co. $28,000 10,000 15.500 Instructions a. Prepare the journal entries to record the exchange on the books of both companies. Assume that the exchange lacks commercial substance. b. Prepare the journal entries to record the exchange on the books of both companies. Assume that the exchange has commercial substance.

E9.20 (LO 3) (Nonmonetary Exchange) Arruza Company exchanged equipment used in its manufacturing operations plus $3,000 in cash for similar equipment used in the operations of LoBianco Company. The following information pertains to the exchange. Equipment (cost) Accumulated depreciation. Fair value of equipment Cash given up Arruza Co. $28,000 19,000 12,500 3,000 LoBianco Co. $28,000 10,000 15.500 Instructions a. Prepare the journal entries to record the exchange on the books of both companies. Assume that the exchange lacks commercial substance. b. Prepare the journal entries to record the exchange on the books of both companies. Assume that the exchange has commercial substance.

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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Item 22 Below is information relative to an exchange of similar assets by a company. Assume the exchange has commercial substance. Old Equipment Cash Book Value Fair Value Paid $ 49,700 $ 60,500 $ 14,100 The company would record the new equipment at:
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Foxtrot Co. exchanged equipment and $17,100 cash for similar equipment. The book value and the fair value of the old equipment were $81,000 and $91,700, respectively. Assuming that the exchange lacks commercial substance, Foxtrot would record a gain/(loss) on exchange of assets in the amount of: Multiple Choice $(10,700). $0. $10,700. $27,800.
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A company exchanged old equipment for new equipment in two exchange transactions. Each transaction has commercial substance. Old Equipment Cash Book Value Fair Value Received $ 73,800 $ 80,800 $ 12,100 The company would record the new equipment at: Multiple Choice $68,700. $70,200. $72,950. $56,200.
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Marigold Corporation traded a used truck for a new truck. The used truck cost $25,000 and has accumulated depreciation of $21,250. The new truck is worth $43,750. Marigold also made a cash payment of $41,250. Prepare Marigold's entry to record the exchange. (The exchange has commercial substance.) (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)