Joshua Company and Kryzel Company are fuel oil distribution. To facilitate the delivery of oil to customers. Joshua Company and Kryzel Company exchanged ownership of 1,000 barrels of oil without physically moving the oil. Joshua Company paid Kryzel Company P1,500,000 to compensate for a difference in the grade of oil. It was reliably determined that the exchange lacks commercial substance because the configuration of the cash flows of the asset received does not differ from the configuration of the cash flows of the asset transferred. On the date of exchange, cost and fiar value of oil were Joshua Company Kryzel Company Cost 5,000,000 6,000,000 Fair Value 7,000,000 8,500,000 Joshua Company should record the oil inventory received in exchange at

Joshua Company and Kryzel Company are fuel oil distribution. To facilitate the delivery of oil to customers. Joshua Company and Kryzel Company exchanged ownership of 1,000 barrels of oil without physically moving the oil. Joshua Company paid Kryzel Company P1,500,000 to compensate for a difference in the grade of oil. It was reliably determined that the exchange lacks commercial substance because the configuration of the cash flows of the asset received does not differ from the configuration of the cash flows of the asset transferred. On the date of exchange, cost and fiar value of oil were Joshua Company Kryzel Company Cost 5,000,000 6,000,000 Fair Value 7,000,000 8,500,000 Joshua Company should record the oil inventory received in exchange at

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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Windsor Company exchanged equipment used in its manufacturing operations plus $3,480 in cash for similar equipment used in the operations of Sheridan Company. The following information pertains to the exchange. 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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B3.
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