Exchanging assets—two situationsPartner Bank recently traded in office fixtures. Here are the facts:RequirementsRecord Partner Bank’s trade-in of old fixtures for new ones. Assume the exchange had commercial substance.Now let’s change one fact. Partner Bank feels compelled to do business with Elm Furniture, a bank customer, even though the bank can get the fixtures elsewhere at a better price. Partner Bank is aware that the new fixtures’ market value is only $126,000. Record the trade-in. Assume the exchange had commercial substance. Old fixtures:Cost, $91,000Accumulated depreciation, $68,000New fixtures:Cash paid, $110,000Market value, $133,000

1. Date Accounts Titles and Explanation Debit Cedit Fixtures - New $133,000…

Answered: Old fixtures: Cost, $91,000 Accumulated…

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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Exchanging assets—two situations

Partner Bank recently traded in office fixtures. Here are the facts:

Requirements

Record Partner Bank’s trade-in of old fixtures for new ones. Assume the exchange had commercial substance.
Now let’s change one fact. Partner Bank feels compelled to do business with Elm Furniture, a bank customer, even though the bank can get the fixtures elsewhere at a better price. Partner Bank is aware that the new fixtures’ market value is only $126,000. Record the trade-in. Assume the exchange had commercial substance.

Old fixtures:
Cost, $91,000
Accumulated depreciation, $68,000
New fixtures:
Cash paid, $110,000
Market value, $133,000

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