Keach Company traded machinery with a book value of $285,000 and a fairvalue of $270,000. It received in exchange from Marlin Company a machinewith a fair value of $300,000. Keach also paid cash of $30,000 in the exchange.Marlin's machine has a book value of $285,000. The transaction lackscommercial substance. What amount of gain or loss should Keach recognize onthe exchange?O $30,000 gain$-0-$1.500 loss$15,000 loss

The book value of the machinery that Keach Company traded is $285,000 and its fair value is…

Answered: Keach Company traded machinery with a…

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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A company exchanged old equipment and $18,200 cash for similar equipment. The book value and the fair value of the old equipment were $81,000 and $91,800, respectively. Assuming that the exchange has commercial substance, the company would record a gain(loss) of:
Consider each of the following independent situations: a. GYT Co. exchanges a machine that cost $4,000 and has accumulated amortization of $2,560 for a similar machine. GYT also receives $25 in the exchange. The fair market value of the old asset is $750. The fair market value of the new asset is $725. There is no commercial substance to the transaction. b. FST Co. exchanges a machine that cost $4,000 and has accumulated amortization of $3,560 for a similar machine. FST also receives $25 in the exchange. The fair market value of the old asset is $750. The fair market value of the new asset is $725. There is no commercial substance to the transaction. c. LKC Co. pays $250 and exchanges a machine that cost $3,000 and has accumulated amortization of $1,900 for a similar machine. The fair market value of the old asset is undeterminable. The fair market value of the new asset is $690. The transaction has commercial substance. d. HRT Co. pays $250 and exchanges a…
Alpesh
An airplane priced at a fair value of $750,000 is acquired in a transaction that has commercial substance by trading in a similar airplane and paying cash for the difference between the trade-in allowance and the price of the new airplane. Required: a. Assuming that the trade-in allowance is $225,000, what is the amount of cash given? b. Assuming that the book value of the airplane traded-in is $175,000, what is the gain or loss on the exchange? Show Your Work:
Required information [The following information applies to the questions displayed below.] Case A. Kapono Farms exchanged an old tractor for a newer model. The old tractor had a book value of $15,000 (original cost of $34,000 less accumulated depreciation of $19,000) and a fair value of $9,600. Kapono paid $26,000 cash to complete the exchange. The exchange has commercial substance. Case B. Kapono Farms exchanged 100 acres of farmland for similar land. The farmland given had a book value of $530,000 and a fair value of $760,000. Kapono paid $56,000 cash to complete the exchange. The exchange has commercial substance. 1. What is the amount of gain or loss that Kapono would recognize on the exchange of the land? 2. Assume the fair value of the farmland given is $424,000 instead of $760,000. What is the amount of gain or loss that Kapono would recognize on the exchange? What is the initial value of the new land? 3. Assume the same facts as Requirement 1 and that the exchange lacked…
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.
Equipment that cost $1,400,000 and has accumulated depreciation of $600,000 is exchanged for equipment with a fair value of $960,000 and $40,000 cash is paid. The exchange has commercial substance. The gain to be recognized from the exchange is
Vinubhai
Caine Company exchanged a car from inventory for a computer to be used as a long-term asset. The following information relates to this exchange: Carrying amount of the car, 600,000List selling price of the car, 900,000’ Fair value of the computer, 860,000’; Cash difference paid by Caine, 100,000. What is the cost of the computer acquired in exchange? 1. Indicate the appropriate entries requires for each of the transactions. 2. Will Caine company declare a gain or loss on this transaction?
Rakesh
Hinrich Company traded machinery with a book value of $120,000 and a fair value of $200,000. It received in exchange from Noach Company a machine with a fair value of $180,000 and cash of $20,000. Noach's machine has a book value of $190,000. The transaction lacks commercial substance. What amount of gain should Hinrich recognize on the exchange? O $-0- O $8.000 $20,000 O $80,000
Rizzo's Delivery Company and Overland's Express Delivery exchanged delivery trucks on January 1, 2022. Rizzo's truck cost $22,000. It has accumulated depreciation of $15,000 and a fair value of $3,000. Overland's truck cost $10,000. It has accumulated depreciation of $8,000 and a fair value of $3,000. The transaction has commercial substance. (a) Journalize the exchange for Rizzo's Delivery Company. (List all debit entries before credit entries. 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 O for the amounts. Include in your journal entry separate account entries for both the new and old equipment.) Account Titles and Explanation Debit Credit

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