Two independent companies, Denver and Bristol, each own a warehouse and Denver agrees to pay Bristol $2,000 to complete the exchange. On January 1, they agree to an exchange in which no cash changes hands. The following information for the two warehouses is available: DenverBristolCost$90,000$47,000Accumulated depreciation50,00020,000Fair value35,00037,000 Required: Assuming the exchange has commercial substance, prepare journal entries for Denver and Bristol to record the exchange.

Journal entries refer to the process of recording and tracking the transactions in chronological…

Answered: Two independent companies, Denver and…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Two independent companies, Denver and Bristol, each own a warehouse and Denver agrees to pay Bristol $2,000 to complete the exchange. On January 1, they agree to an exchange in which no cash changes hands. The following information for the two warehouses is available:

	Denver	Bristol
Cost	$90,000	$47,000
Accumulated depreciation	50,000	20,000
Fair value	35,000	37,000

Required:

Assuming the exchange has commercial substance, prepare journal entries for Denver and Bristol to record the exchange.

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