plus Q2 Mathews Company exchanged equipment used in its manufacturing operations $12,500 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) Accumulated depreciation Fair value of equipment Cash given up Baiggio Book Value Instructions (a) Prepare the journal entries to record the exchange on the books of both companie Assume that the exchange lacks commercial substance. Mathewes Book Value Book Value = Fair Value Baiggio Book Value Fair Value $153,000 $31,000 $132,500 $12,500 (b) Prepare the journal entries to record the exchange on the books of both companie Assume that the exchange has commercial substance. Fair Value Fair Value Gain (Loss) Gain (Loss) $146,000 $18,500 $145,000 Gain (Loss) Gain (Loss)
plus Q2 Mathews Company exchanged equipment used in its manufacturing operations $12,500 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) Accumulated depreciation Fair value of equipment Cash given up Baiggio Book Value Instructions (a) Prepare the journal entries to record the exchange on the books of both companie Assume that the exchange lacks commercial substance. Mathewes Book Value Book Value = Fair Value Baiggio Book Value Fair Value $153,000 $31,000 $132,500 $12,500 (b) Prepare the journal entries to record the exchange on the books of both companie Assume that the exchange has commercial substance. Fair Value Fair Value Gain (Loss) Gain (Loss) $146,000 $18,500 $145,000 Gain (Loss) Gain (Loss)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Q2 Mathews Company exchanged equipment used in its manufacturing operations
$12,500 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)
Accumulated depreciation
Fair value of equipment
Cash given up
Baiggio
Book Value
Instructions
(a) Prepare the journal entries to record the exchange on the books of both companies.
Assume that the exchange lacks commercial substance.
Mathewes
Book Value
Book Value
t
Fair Value
Baiggio
Book Value
Fair Value
$153,000
$31,000
Fair Value
$132,500
$12,500
(b) Prepare the journal entries to record the exchange on the books of both companies.
Assume that the exchange has commercial substance.
Fair Value
Gain (Loss)
Gain (Loss)
$146,000
$18,500
$145,000
Gain (Loss)
Gain (Loss)
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