Question 2: Axle Company no longer needs a large computer for its business, so it wants to trade its computer for a smaller computer plus some cash. Axle's computer originally cost $400,000 and has accumulated depreciation of $120,000, but its fair market value is just $270,000. Bear Company needs a larger computer and is willing to trade its smaller computer plus $80,000 cash for Axle's computer. Bear's computer was purchased for $250,000 and has accumulated depreciation of $50,000; its fair market value is $190,000. The transaction is deemed to have commercial substance. What journal entries will be made by Axle and Bear to record the exchange?
Question 2: Axle Company no longer needs a large computer for its business, so it wants to trade its computer for a smaller computer plus some cash. Axle's computer originally cost $400,000 and has accumulated depreciation of $120,000, but its fair market value is just $270,000. Bear Company needs a larger computer and is willing to trade its smaller computer plus $80,000 cash for Axle's computer. Bear's computer was purchased for $250,000 and has accumulated depreciation of $50,000; its fair market value is $190,000. The transaction is deemed to have commercial substance. What journal entries will be made by Axle and Bear to record the exchange?
Chapter1: Financial Statements And Business Decisions
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Transcribed Image Text:Question 2: Axle Company no longer needs a large computer for its business, so it wants to trade its computer for a smaller computer plus some cash.
Axle's computer originally cost $400,000 and has accumulated depreciation of $120,000, but its fair market value is just $270,000. Bear Company
needs a larger computer and is willing to trade its smaller computer plus $80,000 cash for Axle's computer. Bear's computer was purchased for
$250,000 and has accumulated depreciation of $50,000; its fair market value is $190,000. The transaction is deemed to have commercial substance.
What journal entries will be made by Axle and Bear to record the exchange?
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