Sullivan Corp. exchanged one of their buildings (Building 24), which, on the date of exchange, has an appraised value of $1,710,000, an original cost of $2,800,000 and accumulated depreciation of $1,300,000, for a building from Rutherford Ltd (called Building M). On the date of exchange, Building M has an appraised value of $1,625,000, an original cost of $3,100,000, and accumulated Depreciation of $1,650,000. Rutherford paid Sullivan $85,000 in addition to the exchange of building. Assume depreciation has been recorded on both buildings on the date of exchange. This transaction has no commercial substance. To clarify: Sullivan is giving up Building 24 to get Building M; and Rutherford is giving up Building M to get Building 24. Required: a) Prepare the journal entries that Sullivan Corp. would make to record the exchange. b) Prepare the journal entries that Rutherford Ltd. would make to record the exchange.
Sullivan Corp. exchanged one of their buildings (Building 24), which, on the date of exchange, has an appraised value of $1,710,000, an original cost of $2,800,000 and
On the date of exchange, Building M has an appraised value of $1,625,000, an original cost of $3,100,000, and accumulated Depreciation of $1,650,000. Rutherford paid Sullivan $85,000 in addition to the exchange of building.
Assume depreciation has been recorded on both buildings on the date of exchange. This transaction has no commercial substance.
To clarify: Sullivan is giving up Building 24 to get Building M; and Rutherford is giving up Building M to get Building 24.
Required:
a) Prepare the
b) Prepare the journal entries that Rutherford Ltd. would make to record the exchange.
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