Two independent companies, Denver and Bristol, each own a warehouse, and they agree to an exchange in which no cash changes hands. The following information for the two warehouses is available:   Denver Bristol Cost $100,000 $55,500 Accumulated depreciation 52,000 23,000 Fair value 43,000 43,000         Required: 1. Assuming the exchange has commercial substance, prepare journal entries for Denver and Bristol to record the exchange. 2. Assuming the exchange does not have commercial substance, prepare journal entries for Denver and Bristol to record the exchange.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Two independent companies, Denver and Bristol, each own a warehouse, and they agree to an exchange in which no cash changes hands. The following information for the two warehouses is available:
 
Denver
Bristol
Cost $100,000 $55,500
Accumulated depreciation 52,000 23,000
Fair value 43,000 43,000
     
 
Required:
1. Assuming the exchange has commercial substance, prepare journal entries for Denver and Bristol to record the exchange.
2. Assuming the exchange does not have commercial substance, prepare journal entries for Denver and Bristol to record the exchange.
   
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