Property, Plant, and Equipment: Property, Plant, and Equipment refers to the fixed assets, having a useful life of more than a year that is acquired by a company to be used in its business activities, for generating revenue. To Prepare: The journal entries to record the exchange on the books of Company S.

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Answer 1

Question

Chapter 10, Problem 10.6P

To determine

Property, Plant, and Equipment:

Property, Plant, and Equipment refers to the fixed assets, having a useful life of more than a year that is acquired by a company to be used in its business activities, for generating revenue.

To Prepare: The journal entries to record the exchange on the books of Company S.

Expert Solution & Answer

Explanation of Solution

Date	Account Title and Explanation	Post Ref.	Debit ($)	Credit ($)
	Cash		140,000
	New Building		1,260,000
	Accumulated depreciation – Old building		1,200,000
	Old Building			2,000,000
	Gain on exchange of assets			600,000
	(To record the exchange on the books of R Company.)

Table (1)

Working note:

Determine the value of new building.

Value of building = Fair value (Building)−Cash paid= $1,400,000–$140,000=$1,260,000

Determine the gain on exchange of assets.

Gain on exchange of asset = ((Fair value of Company S's asset)−(Original cost of Company S's asset − Accumulated depreciation) )= ($1,400,000)–($2,000,000–$1,200,000)=$1,400,000−$800,000=$600,000

Cash is an asset account, and increased. Therefore, debit Cash account with $140,000.
New Building increases the asset account. Hence, debit New Equipment account with $1,260,000.
Accumulated depreciation – old asset is a contra asset. It increases the value of asset account. Therefore, debit Accumulated Depreciation with $1,200,000.
Old Building is an asset account, and decreased. Therefore, credit Old Equipment account with $2,000,000.
Gain on sale of exchange of assets increases the equity by $10,000. Hence, credit Gain on sale of exchange of assets with $600,000.

Prepare the journal entries to record the exchange on the books of Company E.

Date	Account Title and Explanation	Post Ref.	Debit ($)	Credit ($)
	New Building		1,400,000
	Accumulated depreciation – Old Building		650,000
	Cash			140,000
	Old Building			1,600,000
	Gain on exchange of buildings			310,000
	(To record the exchange on the books of P Company.)

Table (2)

Working note:

Determine the value of new building.

Value of building = Fair value (Building)+Cash paid= $1,260,000+$140,000=$1,400,000

Determine the gain on exchange of buildings.

Gain on exchange of buildings = ((Fair value of Company E's asset)−(Original cost of Company E's asset − Accumulated depreciation) )= ($1,260,000)–($1,600,000–$650,000)=$1,260,000−$950,000=$310,000

New Building increases the asset account. Hence, debit New Equipment account with $1,400,000.
Accumulated depreciation – old asset is a contra asset. It increases the value of asset account. Therefore, debit Accumulated Depreciation with $650,000.
Cash is an asset account and decreased. Therefore, credit Cash account with $140,000.
Old Building is an asset account, and decreased. Therefore, credit Old Equipment account with $1,600,000.
Gain on exchange of buildings increases the equity by $310,000. Hence, credit Gain on exchange of buildings with $310,000.

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Answer 2

Question

Chapter 10, Problem 10.6P

To determine

Property, Plant, and Equipment:

Property, Plant, and Equipment refers to the fixed assets, having a useful life of more than a year that is acquired by a company to be used in its business activities, for generating revenue.

To Prepare: The journal entries to record the exchange on the books of Company S.

Expert Solution & Answer

Explanation of Solution

Date	Account Title and Explanation	Post Ref.	Debit ($)	Credit ($)
	Cash		140,000
	New Building		1,260,000
	Accumulated depreciation – Old building		1,200,000
	Old Building			2,000,000
	Gain on exchange of assets			600,000
	(To record the exchange on the books of R Company.)

Table (1)

Working note:

Determine the value of new building.

Value of building = Fair value (Building)−Cash paid= $1,400,000–$140,000=$1,260,000

Determine the gain on exchange of assets.

Gain on exchange of asset = ((Fair value of Company S's asset)−(Original cost of Company S's asset − Accumulated depreciation) )= ($1,400,000)–($2,000,000–$1,200,000)=$1,400,000−$800,000=$600,000

Cash is an asset account, and increased. Therefore, debit Cash account with $140,000.
New Building increases the asset account. Hence, debit New Equipment account with $1,260,000.
Accumulated depreciation – old asset is a contra asset. It increases the value of asset account. Therefore, debit Accumulated Depreciation with $1,200,000.
Old Building is an asset account, and decreased. Therefore, credit Old Equipment account with $2,000,000.
Gain on sale of exchange of assets increases the equity by $10,000. Hence, credit Gain on sale of exchange of assets with $600,000.

Prepare the journal entries to record the exchange on the books of Company E.

Date	Account Title and Explanation	Post Ref.	Debit ($)	Credit ($)
	New Building		1,400,000
	Accumulated depreciation – Old Building		650,000
	Cash			140,000
	Old Building			1,600,000
	Gain on exchange of buildings			310,000
	(To record the exchange on the books of P Company.)

Table (2)

Working note:

Determine the value of new building.

Value of building = Fair value (Building)+Cash paid= $1,260,000+$140,000=$1,400,000

Determine the gain on exchange of buildings.

Gain on exchange of buildings = ((Fair value of Company E's asset)−(Original cost of Company E's asset − Accumulated depreciation) )= ($1,260,000)–($1,600,000–$650,000)=$1,260,000−$950,000=$310,000

New Building increases the asset account. Hence, debit New Equipment account with $1,400,000.
Accumulated depreciation – old asset is a contra asset. It increases the value of asset account. Therefore, debit Accumulated Depreciation with $650,000.
Cash is an asset account and decreased. Therefore, credit Cash account with $140,000.
Old Building is an asset account, and decreased. Therefore, credit Old Equipment account with $1,600,000.
Gain on exchange of buildings increases the equity by $310,000. Hence, credit Gain on exchange of buildings with $310,000.

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Answer 3

Question

Chapter 10, Problem 10.6P

To determine

Property, Plant, and Equipment:

Property, Plant, and Equipment refers to the fixed assets, having a useful life of more than a year that is acquired by a company to be used in its business activities, for generating revenue.

To Prepare: The journal entries to record the exchange on the books of Company S.

Expert Solution & Answer

Explanation of Solution

Date	Account Title and Explanation	Post Ref.	Debit ($)	Credit ($)
	Cash		140,000
	New Building		1,260,000
	Accumulated depreciation – Old building		1,200,000
	Old Building			2,000,000
	Gain on exchange of assets			600,000
	(To record the exchange on the books of R Company.)

Table (1)

Working note:

Determine the value of new building.

Value of building = Fair value (Building)−Cash paid= $1,400,000–$140,000=$1,260,000

Determine the gain on exchange of assets.

Gain on exchange of asset = ((Fair value of Company S's asset)−(Original cost of Company S's asset − Accumulated depreciation) )= ($1,400,000)–($2,000,000–$1,200,000)=$1,400,000−$800,000=$600,000

Cash is an asset account, and increased. Therefore, debit Cash account with $140,000.
New Building increases the asset account. Hence, debit New Equipment account with $1,260,000.
Accumulated depreciation – old asset is a contra asset. It increases the value of asset account. Therefore, debit Accumulated Depreciation with $1,200,000.
Old Building is an asset account, and decreased. Therefore, credit Old Equipment account with $2,000,000.
Gain on sale of exchange of assets increases the equity by $10,000. Hence, credit Gain on sale of exchange of assets with $600,000.

Prepare the journal entries to record the exchange on the books of Company E.

Date	Account Title and Explanation	Post Ref.	Debit ($)	Credit ($)
	New Building		1,400,000
	Accumulated depreciation – Old Building		650,000
	Cash			140,000
	Old Building			1,600,000
	Gain on exchange of buildings			310,000
	(To record the exchange on the books of P Company.)

Table (2)

Working note:

Determine the value of new building.

Value of building = Fair value (Building)+Cash paid= $1,260,000+$140,000=$1,400,000

Determine the gain on exchange of buildings.

Gain on exchange of buildings = ((Fair value of Company E's asset)−(Original cost of Company E's asset − Accumulated depreciation) )= ($1,260,000)–($1,600,000–$650,000)=$1,260,000−$950,000=$310,000

New Building increases the asset account. Hence, debit New Equipment account with $1,400,000.
Accumulated depreciation – old asset is a contra asset. It increases the value of asset account. Therefore, debit Accumulated Depreciation with $650,000.
Cash is an asset account and decreased. Therefore, credit Cash account with $140,000.
Old Building is an asset account, and decreased. Therefore, credit Old Equipment account with $1,600,000.
Gain on exchange of buildings increases the equity by $310,000. Hence, credit Gain on exchange of buildings with $310,000.

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Answer 4

Question

Chapter 10, Problem 10.6P

To determine

Property, Plant, and Equipment:

Property, Plant, and Equipment refers to the fixed assets, having a useful life of more than a year that is acquired by a company to be used in its business activities, for generating revenue.

To Prepare: The journal entries to record the exchange on the books of Company S.

Expert Solution & Answer

Explanation of Solution

Date	Account Title and Explanation	Post Ref.	Debit ($)	Credit ($)
	Cash		140,000
	New Building		1,260,000
	Accumulated depreciation – Old building		1,200,000
	Old Building			2,000,000
	Gain on exchange of assets			600,000
	(To record the exchange on the books of R Company.)

Table (1)

Working note:

Determine the value of new building.

Value of building = Fair value (Building)−Cash paid= $1,400,000–$140,000=$1,260,000

Determine the gain on exchange of assets.

Gain on exchange of asset = ((Fair value of Company S's asset)−(Original cost of Company S's asset − Accumulated depreciation) )= ($1,400,000)–($2,000,000–$1,200,000)=$1,400,000−$800,000=$600,000

Cash is an asset account, and increased. Therefore, debit Cash account with $140,000.
New Building increases the asset account. Hence, debit New Equipment account with $1,260,000.
Accumulated depreciation – old asset is a contra asset. It increases the value of asset account. Therefore, debit Accumulated Depreciation with $1,200,000.
Old Building is an asset account, and decreased. Therefore, credit Old Equipment account with $2,000,000.
Gain on sale of exchange of assets increases the equity by $10,000. Hence, credit Gain on sale of exchange of assets with $600,000.

Prepare the journal entries to record the exchange on the books of Company E.

Date	Account Title and Explanation	Post Ref.	Debit ($)	Credit ($)
	New Building		1,400,000
	Accumulated depreciation – Old Building		650,000
	Cash			140,000
	Old Building			1,600,000
	Gain on exchange of buildings			310,000
	(To record the exchange on the books of P Company.)

Table (2)

Working note:

Determine the value of new building.

Value of building = Fair value (Building)+Cash paid= $1,260,000+$140,000=$1,400,000

Determine the gain on exchange of buildings.

Gain on exchange of buildings = ((Fair value of Company E's asset)−(Original cost of Company E's asset − Accumulated depreciation) )= ($1,260,000)–($1,600,000–$650,000)=$1,260,000−$950,000=$310,000

New Building increases the asset account. Hence, debit New Equipment account with $1,400,000.
Accumulated depreciation – old asset is a contra asset. It increases the value of asset account. Therefore, debit Accumulated Depreciation with $650,000.
Cash is an asset account and decreased. Therefore, credit Cash account with $140,000.
Old Building is an asset account, and decreased. Therefore, credit Old Equipment account with $1,600,000.
Gain on exchange of buildings increases the equity by $310,000. Hence, credit Gain on exchange of buildings with $310,000.

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Answer 5

Chapter 10, Problem 10.6P

To determine

Property, Plant, and Equipment:

Property, Plant, and Equipment refers to the fixed assets, having a useful life of more than a year that is acquired by a company to be used in its business activities, for generating revenue.

To Prepare: The journal entries to record the exchange on the books of Company S.

Expert Solution & Answer

Explanation of Solution

Date	Account Title and Explanation	Post Ref.	Debit ($)	Credit ($)
	Cash		140,000
	New Building		1,260,000
	Accumulated depreciation – Old building		1,200,000
	Old Building			2,000,000
	Gain on exchange of assets			600,000
	(To record the exchange on the books of R Company.)

Table (1)

Working note:

Determine the value of new building.

Value of building = Fair value (Building)−Cash paid= $1,400,000–$140,000=$1,260,000

Determine the gain on exchange of assets.

Gain on exchange of asset = ((Fair value of Company S's asset)−(Original cost of Company S's asset − Accumulated depreciation) )= ($1,400,000)–($2,000,000–$1,200,000)=$1,400,000−$800,000=$600,000

Cash is an asset account, and increased. Therefore, debit Cash account with $140,000.
New Building increases the asset account. Hence, debit New Equipment account with $1,260,000.
Accumulated depreciation – old asset is a contra asset. It increases the value of asset account. Therefore, debit Accumulated Depreciation with $1,200,000.
Old Building is an asset account, and decreased. Therefore, credit Old Equipment account with $2,000,000.
Gain on sale of exchange of assets increases the equity by $10,000. Hence, credit Gain on sale of exchange of assets with $600,000.

Prepare the journal entries to record the exchange on the books of Company E.

Date	Account Title and Explanation	Post Ref.	Debit ($)	Credit ($)
	New Building		1,400,000
	Accumulated depreciation – Old Building		650,000
	Cash			140,000
	Old Building			1,600,000
	Gain on exchange of buildings			310,000
	(To record the exchange on the books of P Company.)

Table (2)

Working note:

Determine the value of new building.

Value of building = Fair value (Building)+Cash paid= $1,260,000+$140,000=$1,400,000

Determine the gain on exchange of buildings.

Gain on exchange of buildings = ((Fair value of Company E's asset)−(Original cost of Company E's asset − Accumulated depreciation) )= ($1,260,000)–($1,600,000–$650,000)=$1,260,000−$950,000=$310,000

New Building increases the asset account. Hence, debit New Equipment account with $1,400,000.
Accumulated depreciation – old asset is a contra asset. It increases the value of asset account. Therefore, debit Accumulated Depreciation with $650,000.
Cash is an asset account and decreased. Therefore, credit Cash account with $140,000.
Old Building is an asset account, and decreased. Therefore, credit Old Equipment account with $1,600,000.
Gain on exchange of buildings increases the equity by $310,000. Hence, credit Gain on exchange of buildings with $310,000.

Answer 6

Chapter 10, Problem 10.6P

To determine

Property, Plant, and Equipment:

Property, Plant, and Equipment refers to the fixed assets, having a useful life of more than a year that is acquired by a company to be used in its business activities, for generating revenue.

To Prepare: The journal entries to record the exchange on the books of Company S.

Expert Solution & Answer

Explanation of Solution

Date	Account Title and Explanation	Post Ref.	Debit ($)	Credit ($)
	Cash		140,000
	New Building		1,260,000
	Accumulated depreciation – Old building		1,200,000
	Old Building			2,000,000
	Gain on exchange of assets			600,000
	(To record the exchange on the books of R Company.)

Table (1)

Working note:

Determine the value of new building.

Value of building = Fair value (Building)−Cash paid= $1,400,000–$140,000=$1,260,000

Determine the gain on exchange of assets.

Gain on exchange of asset = ((Fair value of Company S's asset)−(Original cost of Company S's asset − Accumulated depreciation) )= ($1,400,000)–($2,000,000–$1,200,000)=$1,400,000−$800,000=$600,000

Cash is an asset account, and increased. Therefore, debit Cash account with $140,000.
New Building increases the asset account. Hence, debit New Equipment account with $1,260,000.
Accumulated depreciation – old asset is a contra asset. It increases the value of asset account. Therefore, debit Accumulated Depreciation with $1,200,000.
Old Building is an asset account, and decreased. Therefore, credit Old Equipment account with $2,000,000.
Gain on sale of exchange of assets increases the equity by $10,000. Hence, credit Gain on sale of exchange of assets with $600,000.

Prepare the journal entries to record the exchange on the books of Company E.

Date	Account Title and Explanation	Post Ref.	Debit ($)	Credit ($)
	New Building		1,400,000
	Accumulated depreciation – Old Building		650,000
	Cash			140,000
	Old Building			1,600,000
	Gain on exchange of buildings			310,000
	(To record the exchange on the books of P Company.)

Table (2)

Working note:

Determine the value of new building.

Value of building = Fair value (Building)+Cash paid= $1,260,000+$140,000=$1,400,000

Determine the gain on exchange of buildings.

Gain on exchange of buildings = ((Fair value of Company E's asset)−(Original cost of Company E's asset − Accumulated depreciation) )= ($1,260,000)–($1,600,000–$650,000)=$1,260,000−$950,000=$310,000

New Building increases the asset account. Hence, debit New Equipment account with $1,400,000.
Accumulated depreciation – old asset is a contra asset. It increases the value of asset account. Therefore, debit Accumulated Depreciation with $650,000.
Cash is an asset account and decreased. Therefore, credit Cash account with $140,000.
Old Building is an asset account, and decreased. Therefore, credit Old Equipment account with $1,600,000.
Gain on exchange of buildings increases the equity by $310,000. Hence, credit Gain on exchange of buildings with $310,000.

Answer 7

Chapter 10, Problem 10.6P

To determine

Property, Plant, and Equipment:

Property, Plant, and Equipment refers to the fixed assets, having a useful life of more than a year that is acquired by a company to be used in its business activities, for generating revenue.

To Prepare: The journal entries to record the exchange on the books of Company S.

Answer 8

Expert Solution & Answer

Explanation of Solution

Date	Account Title and Explanation	Post Ref.	Debit ($)	Credit ($)
	Cash		140,000
	New Building		1,260,000
	Accumulated depreciation – Old building		1,200,000
	Old Building			2,000,000
	Gain on exchange of assets			600,000
	(To record the exchange on the books of R Company.)

Table (1)

Working note:

Determine the value of new building.

Value of building = Fair value (Building)−Cash paid= $1,400,000–$140,000=$1,260,000

Determine the gain on exchange of assets.

Gain on exchange of asset = ((Fair value of Company S's asset)−(Original cost of Company S's asset − Accumulated depreciation) )= ($1,400,000)–($2,000,000–$1,200,000)=$1,400,000−$800,000=$600,000

Cash is an asset account, and increased. Therefore, debit Cash account with $140,000.
New Building increases the asset account. Hence, debit New Equipment account with $1,260,000.
Accumulated depreciation – old asset is a contra asset. It increases the value of asset account. Therefore, debit Accumulated Depreciation with $1,200,000.
Old Building is an asset account, and decreased. Therefore, credit Old Equipment account with $2,000,000.
Gain on sale of exchange of assets increases the equity by $10,000. Hence, credit Gain on sale of exchange of assets with $600,000.

Prepare the journal entries to record the exchange on the books of Company E.

Date	Account Title and Explanation	Post Ref.	Debit ($)	Credit ($)
	New Building		1,400,000
	Accumulated depreciation – Old Building		650,000
	Cash			140,000
	Old Building			1,600,000
	Gain on exchange of buildings			310,000
	(To record the exchange on the books of P Company.)

Table (2)

Working note:

Determine the value of new building.

Value of building = Fair value (Building)+Cash paid= $1,260,000+$140,000=$1,400,000

Determine the gain on exchange of buildings.

Gain on exchange of buildings = ((Fair value of Company E's asset)−(Original cost of Company E's asset − Accumulated depreciation) )= ($1,260,000)–($1,600,000–$650,000)=$1,260,000−$950,000=$310,000

New Building increases the asset account. Hence, debit New Equipment account with $1,400,000.
Accumulated depreciation – old asset is a contra asset. It increases the value of asset account. Therefore, debit Accumulated Depreciation with $650,000.
Cash is an asset account and decreased. Therefore, credit Cash account with $140,000.
Old Building is an asset account, and decreased. Therefore, credit Old Equipment account with $1,600,000.
Gain on exchange of buildings increases the equity by $310,000. Hence, credit Gain on exchange of buildings with $310,000.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Ch. 10 - Prob. 10.1Q Ch. 10 - Prob. 10.2Q Ch. 10 - Prob. 10.3Q Ch. 10 - Prob. 10.4Q Ch. 10 - Prob. 10.5Q Ch. 10 - Prob. 10.6Q Ch. 10 - When an asset is acquired and a note payable is...Ch. 10 - Explain how assets acquired in exchange for equity...Ch. 10 - Prob. 10.9Q Ch. 10 - What account is credited when a company receives...

Solution Summary: The author explains that property, plant, and equipment refers to the fixed assets that are acquired by a company to be used in its business activities, for generating revenue.

Explanation of Solution

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