Southern Company owns a building that it leases to others. The building's fair value is $1,400,000 and its book value is $800, (original cost of $2,000,000 less accumulated depreciation of $1,200,000). Southern exchanges this for a building owned by Eastern Company. The building's book value on Eastern's books is $950,000 (original cost of $1,600,000 less accumulated depreciation of $650,000). Eastern also gives Southern $140,000 to complete the exchange. The exchange has commercial s for both companies. Required: Prepare the journal entries to record the exchange on the books of both Southern and Eastern. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) No 1 2 Event 1 2 Answer is complete but not entirely correct. General Journal Building-new Accumulated depreciation Cash Building old Gain on exchange of assets Building new Accumulated depreciation Building old Gain on exchange of assets Cash 40003 30033 Debit 1,400,000 1,200,000 140,000 1,400,000 650,000 Credit 2,000,000 740,000 1,600,000 310,000 140,000
Southern Company owns a building that it leases to others. The building's fair value is $1,400,000 and its book value is $800, (original cost of $2,000,000 less accumulated depreciation of $1,200,000). Southern exchanges this for a building owned by Eastern Company. The building's book value on Eastern's books is $950,000 (original cost of $1,600,000 less accumulated depreciation of $650,000). Eastern also gives Southern $140,000 to complete the exchange. The exchange has commercial s for both companies. Required: Prepare the journal entries to record the exchange on the books of both Southern and Eastern. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) No 1 2 Event 1 2 Answer is complete but not entirely correct. General Journal Building-new Accumulated depreciation Cash Building old Gain on exchange of assets Building new Accumulated depreciation Building old Gain on exchange of assets Cash 40003 30033 Debit 1,400,000 1,200,000 140,000 1,400,000 650,000 Credit 2,000,000 740,000 1,600,000 310,000 140,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Southern Company owns a building that it leases to others. The building's fair value is $1,400,000 and its book value is $800,000
(original cost of $2,000,000 less accumulated depreciation of $1,200,000). Southern exchanges this for a building owned by the
Eastern Company. The building's book value on Eastern's books is $950,000 (original cost of $1,600,000 less accumulated
depreciation of $650,000). Eastern also gives Southern $140,000 to complete the exchange. The exchange has commercial substance
for both companies.
Required:
Prepare the journal entries to record the exchange on the books of both Southern and Eastern. (If no entry is required for a
transaction/event, select "No journal entry required" in the first account field.)
No
1
2
Event
1
2
Answer is complete but not entirely correct.
General Journal
Building-new
Accumulated depreciation
Cash
Building-old
Gain on exchange of assets
Building new
Accumulated depreciation
Building old
Gain on exchange of assets
Cash
030
♥
S
30033
Debit
1,400,000
1,200,000
140,000
1,400,000
650,000
Credit
2,000,000
740,000
1,600,000
310,000
140,000
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