Textile manufacturer Sunland Corp. exchanges robotic equipment with an original cost of $22,000 and a carrying amount of $10,800 with the equipment rental company Culver Corp. The equipment that is received in exchange from Culver Corp. has an original cost of $40,800 and a carrying amount of $14,900, performs different functions, and has a fair value of $20,800. The individual shareholder owned only 40% of the shares of each company. Because they are closely held companies, they both follow ASPE. Assume that there is independent evidence to support the value of the computer software.
Textile manufacturer Sunland Corp. exchanges robotic equipment with an original cost of $22,000 and a carrying amount of $10,800 with the equipment rental company Culver Corp. The equipment that is received in exchange from Culver Corp. has an original cost of $40,800 and a carrying amount of $14,900, performs different functions, and has a fair value of $20,800. The individual shareholder owned only 40% of the shares of each company. Because they are closely held companies, they both follow ASPE. Assume that there is independent evidence to support the value of the computer software.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Textile manufacturer Sunland Corp. exchanges robotic equipment with an original cost of $22,000 and a carrying
amount of $10,800 with the equipment rental company Culver Corp. The equipment that is received in exchange
from Culver Corp. has an original cost of $40,800 and a carrying amount of $14,900, performs different functions,
and has a fair value of $20,800. The individual shareholder owned only 40% of the shares of each company. Because
they are closely held companies, they both follow ASPE. Assume that there is independent evidence to support the
value of the computer software.
Prepare the journal entries for both companies to record the exchange. (Credit account titles are automatically
indented when the amount is entered. Do not indent manually.)
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