Mathews Company exchanged equipment used in its manufacturing operations plus $6,000 in cash for similar equipment used in the operations of Biggio Company. The following information pertains to the exchange. Mathews Co. Biggio Co. Equipment (cost) $54,000 $44,000 Accumulated depreciation $36,000 $18,000 Fair value of equipment $25,000 $31,000 Cash given up $6,000 Instructions (a) Prepare the journal entries to record the exchange on the books of both companies. Assume that the exchange has commercial substance. (b) Prepare the journal entries to record the exchange on the books of both companies. Assume that the exchange lacks commercial substance.
Mathews Company exchanged equipment used in its manufacturing operations plus $6,000 in cash for similar equipment used in the operations of Biggio Company. The following information pertains to the exchange. Mathews Co. Biggio Co. Equipment (cost) $54,000 $44,000 Accumulated depreciation $36,000 $18,000 Fair value of equipment $25,000 $31,000 Cash given up $6,000 Instructions (a) Prepare the journal entries to record the exchange on the books of both companies. Assume that the exchange has commercial substance. (b) Prepare the journal entries to record the exchange on the books of both companies. Assume that the exchange lacks commercial substance.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Mathews Company exchanged equipment used in its manufacturing operations plus $6,000 in cash for similar equipment used in the
operations of Biggio Company.
The following information pertains to the exchange.
Mathews Co. Biggio Co.
Equipment (cost)
$54,000
$44,000
Accumulated depreciation $36,000
$18,000
Fair value of equipment $25,000
$31,000
Cash given up
$6,000
Instructions
(a) Prepare the journal entries to record the exchange on the books of both companies.
Assume that the exchange has commercial substance.
(b) Prepare the journal entries to record the exchange on the books of both companies.
Assume that the exchange lacks commercial substance.
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