Pensacola Inc. purchased equipment on January 1, 2016 for $135,000.After 3 years Pensacola exchanged the equioment for a truck from Mami, inc. in a exchange. The balance in the Accumulated Depreciation account at the time of the exchange was $75,000 Assume the exchange lacks commercial substance. At the time of the exchange, the fair value of the equipment was $77,000 and the fair value of the truck was $57,000. Miami paid $20,000 cashvboot to Pensacola monetan What is the cost basis of the truck acquired by Pensacola? $44,415 $52,585 O $57,000 O $40,000 O None of the above

Pensacola Inc. purchased equipment on January 1, 2016 for $135,000.After 3 years Pensacola exchanged the equioment for a truck from Mami, inc. in a exchange. The balance in the Accumulated Depreciation account at the time of the exchange was $75,000 Assume the exchange lacks commercial substance. At the time of the exchange, the fair value of the equipment was $77,000 and the fair value of the truck was $57,000. Miami paid $20,000 cashvboot to Pensacola monetan What is the cost basis of the truck acquired by Pensacola? $44,415 $52,585 O $57,000 O $40,000 O None of the above

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Dengar
The Siri Company acquired equipment on January 1, 2015 at a cost of P400,000, depreciating it over 8 years with a nil residual value. On January 1, 2018. The Triss Company acquired 100% of Siri and estimated the fair value of the equipment at P230,000 with a remaining life of 5 years. This fair value was not incorporated into Siri’s books and the depreciation expense continued to be calculated by reference to original cost. What adjustments should be made to the depreciation expense for the year and the statement of financial position carrying amount in preparing the consolidated financial statements for the year ended December 31, 2019? DEPRECIATION EXPENSE -decrease by P4,000 ; CARRYING AMOUNT - decreased by P12,000 DEPRECIATION EXPENSE -decreased by P4,000 ; CARRYING AMOUNT - increased by P12,000 DEPRECIATION EXPENSE -increase by P4,000 ; CARRYING AMOUNT - decreased by P12,000 DEPRECIATION EXPENSE…
In December 2005, SHOWEE Company exchanged an old machine, with a cost P6,000,000 and 50% depreciated, for a dissimilar used machine and paid a cash difference of P1,500,000. The fair value of the old machine was determined to be P2,000,000. SHOWEE should record the machine at 6,000,000 3,500,000 3,000,000 2,000,000
Pensacola Inc. purchased equipment on January 1, 2016 for $135,000. Ater 3 years Pensacola exchanged the equipment for a truck from Mam, Inc in a non-monetary exchange. The balance in the Accumulated Depreciation account at the time of the exchange was $75,000. Assume the exchange lacks commercial substance. At the time of the exchange, the fair value of the equipment was $77 000 and the fair vallue of the truck was $57,000. Miami paid 520,000 cashtoot to Pensacola What is the cost basis of the truck acquired by Pensacola? O $44,415 $52,585 $57,000 O $40,000 O None of the above
Cedric Company recently traded in an older model of equipment for a new model. The old model’s book value was $180,000 (original cost of $400,000 less $220,000 in accumulated depreciation) and its fair value was $170,000. Cedric paid $60,000 to complete the exchange which has commercial substance. Required: Equipment - new ___?___ Accumulated depreciation 220,000 Loss on exchange of assets 10,000 Cash 60,000 Equipment - old 400,000
Jacky Inc. purchased Manzanita Marine on June 1, 2015 for $25,000,000 and recorded goodwill of $3,100,000 in connection with the purchase. At December 31, 2018, the Manzanita Marine Division had a fair value of $25,400,000. The net assets of Manzanita (including goodwill) had a fair value of $24,900,000 at that time. What amount of loss on impairment of goodwill should Jacky record in 2018?
Consider each of the independent transactions below: a) The University of Belize traded an older version vehicle with a newer model at Bravo Motors. The initial cost of the older version was $50,000 and accumulated depreciation up to the time of trading, was $41,000. The fair value at the time is $13,000. As part of the trading, the University paid $42,000 in cash. b) Jacky's Car Rentals traded a piece of land for a vehicle from Ozark Company. The fair values of the land and the vehicle are $75,000 and $49,000 respectively. Jacky received $26,000 to complete the transaction. Required: Assume you provide accounting services for the University and for Jack's Car Rentals, 1. Determine gain/loss on each transaction and the FV of the new asset acquired 2. Prepare journal entries to record each of the two transactions
On 1 July 2017, Entity A purchased a chemical machine from Entity B on credit. The purchase price was $4,560,000 and it will be fully settled on 1 August 2017. A legal and professional fee of $35,500 was paid by a cheque to Entity C in order to ensure the machine can be ready for use on 1 July 2017. The economic life of the machine is 5 years without any residual value. According to the purchase contract, Entity A is required to remove the plant on 30 June 2022 and Entity A estimated the dismantling costs of the plant will be $55,123 on that day. Entity A considered that a discount rate of 10.50% is appropriate for the calculation of present value. On 30 June 2022, the actual dismantling costs were only $45,600 and they were paid by a direct bank transfer to Entity D. On 1 July 2022, a recycling company, Entity E, purchased all the machine scraps for $32,500 on credit and agreed to pay in full on 16 July 2022. REQUIRED: According to relevant accounting standards, prepare journal…
On January 2, 2017, Snug Clothing Consignments purchased showroom fixtures for $19,000 cash, expecting the fixtures to remain in service for five years. Snug has depreciated the fixtures on a double-declining-balance basis, with zero residual value. On October 31, 2018, Snug sold the fixtures for $8,200 cash. Record both depreciation expense for 2018 and sale of the fixtures on October 31, 2018. (Record debits first, then credits. Select the explanation on the last line of the journal entry table. Note that 2017 depreciation was recorded and posted in 2017.) Begin by recording the depreciation expense for January 1, 2018 through October 31, 2018. Date Oct. 31 Accounts and Explanation Debit Credit
On July 15, 2018, Cottonwood Industries sold a patent and equipment to Roquemore Corporation for $750,000and $325,000, respectively. The book value of the patent and equipment on the date of sale were $120,000 and$400,000 (cost of $550,000 less accumulated depreciation of $150,000), respectively. Prepare the journal entriesto record the sales of the patent and equipment.