On November 1, Peery Corp. traded equipment with Williams Co.Peary Corp.$4900,000Williams Co.Equipment (cost)Accumulated depreciationFair value of EquipmentCash received (paid)$1,570,000850,000$230,000640,000780,000(140,000)140,000The exchange lacks commercial substance.Instructions:a.) Provide Peery's journal entry to record this exchange.b.) Provide Williams's journal entry to record this exchange.

Commercial substance means that the contract has change in timing of the cash flow and there is cash…

On November 1, Peery Corp. traded equipment with Williams Co. Peary Corp. 900,000 230,000 640,000 Williams Co. Equipment (cost) Accumulated depreciation Fair value of Equipment Cash received (paid) $ 1,570,000 $4 850,000 $ 780,000 2$ (140,000) 140,000 The exchange lacks commercial substance. Instructions: a.) Provide Peery's journal entry to record this exchange.

On November 1, Peery Corp. traded equipment with Williams Co. Peary Corp. 900,000 230,000 640,000 Williams Co. Equipment (cost) Accumulated depreciation Fair value of Equipment Cash received (paid) $ 1,570,000 $4 850,000 $ 780,000 2$ (140,000) 140,000 The exchange lacks commercial substance. Instructions: a.) Provide Peery's journal entry to record this exchange.

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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E9.20 (LO 3) (Nonmonetary Exchange) Arruza Company exchanged equipment used in its manufacturing operations plus $3,000 in cash for similar equipment used in the operations of LoBianco Company. The following information pertains to the exchange. Equipment (cost) Accumulated depreciation Fair value of equipment Cash given up Arruza Co. $28,000 19,000 12,500 3,000 LoBianco Co. $28,000 10,000 15,500 Instructions a. Prepare the journal entries to record the exchange on the books of both companies. Assume that the exchange lacks commercial substance. b. 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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Item 20 A company exchanged land and cash of $5,800 for similar land. The book value and the fair value of the land were $89,800 and $101,000, respectively. Assuming that the exchange has commercial substance, the company would record land—new and a gain on exchange of assets in the amounts of: Land Gain a. $ 106,800 $ 0 b. $ 106,800 $ 11,200 c. $ 95,600 $ 0 d. $ 95,600 $ 11,200 Multiple Choice
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A company exchanged old equipment for new equipment in two exchange transactions. Each transaction has commercial substance. Old Equipment Cash Book Value Fair Value Received $ 73,800 $ 80,800 $ 12,100 The company would record the new equipment at: Multiple Choice $68,700. $70,200. $72,950. $56,200.
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