Headland Corporation wishes to exchange a machine used in its operations. Headland has received the following offers from other companies in the industry. 1. Sage Company offered to exchange a similar machine plus $28,520. (The exchange has commercial substance for both parties.) Pronghorn Company offered to exchange a similar machine. (The exchange lacks commercial substance for both parties.) Stellar Company offered to exchange a similar machine, but wanted $3,720 in addition to Headland's machine. (The exchange has commercial substance for both parties.) 2. 3. In addition, Headland contacted Pearl Corporation, a dealer in machines. To obtain a new machine, Headland must pay $115,320 in addition to trading in its old machine. Machine cost Accumulated depreciation Fair value Headland $198,400 74,400 114,080 Sage $148,800 55,800 85,560 Pronghorn Stellar $188,480 $198,400 93,000 117,800 88,040 114,080 Pearl $161,200 -0- 229,400

Headland Corporation wishes to exchange a machine used in its operations. Headland has received the following offers from other companies in the industry. 1. Sage Company offered to exchange a similar machine plus $28,520. (The exchange has commercial substance for both parties.) Pronghorn Company offered to exchange a similar machine. (The exchange lacks commercial substance for both parties.) Stellar Company offered to exchange a similar machine, but wanted $3,720 in addition to Headland's machine. (The exchange has commercial substance for both parties.) 2. 3. In addition, Headland contacted Pearl Corporation, a dealer in machines. To obtain a new machine, Headland must pay $115,320 in addition to trading in its old machine. Machine cost Accumulated depreciation Fair value Headland $198,400 74,400 114,080 Sage $148,800 55,800 85,560 Pronghorn Stellar $188,480 $198,400 93,000 117,800 88,040 114,080 Pearl $161,200 -0- 229,400

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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