Major Co. exchanged equipment with Minor, Inc. Pertinent data are shown below: Major Co.Minor, Inc. Equipment 2,000,000 4,000,000 Accumulated depreciation 400,000 1,600,000 Carrying amount 1,600,000 2,400,000 Fair vaue 1,900,000 2,200,000 Cash paid by Major Co. to Minor,Inc. 280,000 280,000 Case 1: The exchange transaction has commercial substance. Provide the journal entries in the books of Major and Minor. Case 2: Use the information in the fact pattern above but assume Major Co. cannot determine the fair value of the asset given up. The exchange transaction has commercial substance. Provide the journal entries in the books of Major Co. Case 3: The exchange transaction has no commercial substance. Provide the entries in the books of Major and Major.
Major Co. exchanged equipment with Minor, Inc. Pertinent data are shown below:
Major Co.Minor, Inc.
Equipment 2,000,000 4,000,000
Carrying amount 1,600,000 2,400,000
Fair vaue 1,900,000 2,200,000
Cash paid by Major Co. to Minor,Inc. 280,000 280,000
Case 1: The exchange transaction has commercial substance. Provide the
Case 2: Use the information in the fact pattern above but assume Major Co. cannot determine the fair value of the asset given up. The exchange transaction has commercial substance. Provide the journal entries in the books of Major Co.
Case 3: The exchange transaction has no commercial substance. Provide the entries in the books of Major and Major.
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