On November 1, Peery Corp. traded equipment with Williams Co.Peary Corp.$4900,000Williams Co.Equipment (cost)Accumulated depreciationFair value of EquipmentCash received (paid)$1,570,000850,000$230,000640,000780,000(140,000)140,000The exchange lacks commercial substance.Instructions:a.) Provide Peery's journal entry to record this exchange.b.) Provide Williams's journal entry to record this exchange.

Commercial substance means that the contract has change in timing of the cash flow and there is cash…

On November 1, Peery Corp. traded equipment with Williams Co. Peary Corp. 900,000 230,000 640,000 Williams Co. Equipment (cost) Accumulated depreciation Fair value of Equipment Cash received (paid) $ 1,570,000 $4 850,000 $ 780,000 2$ (140,000) 140,000 The exchange lacks commercial substance. Instructions: a.) Provide Peery's journal entry to record this exchange.

On November 1, Peery Corp. traded equipment with Williams Co. Peary Corp. 900,000 230,000 640,000 Williams Co. Equipment (cost) Accumulated depreciation Fair value of Equipment Cash received (paid) $ 1,570,000 $4 850,000 $ 780,000 2$ (140,000) 140,000 The exchange lacks commercial substance. Instructions: a.) Provide Peery's journal entry to record this exchange.

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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7
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The following information relates to an exchange of assets by Wharton Company. The exchange lacks commercial substance. Old Equipment Book Value Fair Value Cash Paid Case I $75,000 $85,000 $15,000 Case II $50,000 $45,000 $7,000 For Case I, Wharton records the equipment at $ Answer on its books and reports a gain or (loss) of $ Answer on the exchange.
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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.
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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.)