Exchange of Used asset and commercial substance: Sometimes an asset can be acquired in exchange of an existing used asset. The used asset would be exchanged at a price which may be more or less than the cost of the new asset. Any deficit resulting from the exchange is paid in cash. This exchange may result in a gain or loss on the disposal of the old asset, which should be recorded as part of the transaction. When the exchange is for nonmonetary assets, fair value is the basis of measurement. If the future cash flows are likely to change as a result of the exchange, then the transaction has commercial substance. (a) To record: To record the exchange for both H and W in accordance with generally accepted accounting principles.

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Answer 1

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Chapter 10, Problem 9P

To determine

Exchange of Used asset and commercial substance: Sometimes an asset can be acquired in exchange of an existing used asset. The used asset would be exchanged at a price which may be more or less than the cost of the new asset. Any deficit resulting from the exchange is paid in cash. This exchange may result in a gain or loss on the disposal of the old asset, which should be recorded as part of the transaction. When the exchange is for nonmonetary assets, fair value is the basis of measurement. If the future cash flows are likely to change as a result of the exchange, then the transaction has commercial substance.

(a)

To record: To record the exchange for both H and W in accordance with generally accepted accounting principles.

To determine

(b)

To determine whether the exchange of Assets A and B lacks commercial substance.

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Question

Chapter 10, Problem 9P

To determine

Exchange of Used asset and commercial substance: Sometimes an asset can be acquired in exchange of an existing used asset. The used asset would be exchanged at a price which may be more or less than the cost of the new asset. Any deficit resulting from the exchange is paid in cash. This exchange may result in a gain or loss on the disposal of the old asset, which should be recorded as part of the transaction. When the exchange is for nonmonetary assets, fair value is the basis of measurement. If the future cash flows are likely to change as a result of the exchange, then the transaction has commercial substance.

(a)

To record: To record the exchange for both H and W in accordance with generally accepted accounting principles.

To determine

(b)

To determine whether the exchange of Assets A and B lacks commercial substance.

Expert Solution & Answer

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Answer 3

Question

Chapter 10, Problem 9P

To determine

Exchange of Used asset and commercial substance: Sometimes an asset can be acquired in exchange of an existing used asset. The used asset would be exchanged at a price which may be more or less than the cost of the new asset. Any deficit resulting from the exchange is paid in cash. This exchange may result in a gain or loss on the disposal of the old asset, which should be recorded as part of the transaction. When the exchange is for nonmonetary assets, fair value is the basis of measurement. If the future cash flows are likely to change as a result of the exchange, then the transaction has commercial substance.

(a)

To record: To record the exchange for both H and W in accordance with generally accepted accounting principles.

To determine

(b)

To determine whether the exchange of Assets A and B lacks commercial substance.

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Answer 4

Question

Chapter 10, Problem 9P

To determine

Exchange of Used asset and commercial substance: Sometimes an asset can be acquired in exchange of an existing used asset. The used asset would be exchanged at a price which may be more or less than the cost of the new asset. Any deficit resulting from the exchange is paid in cash. This exchange may result in a gain or loss on the disposal of the old asset, which should be recorded as part of the transaction. When the exchange is for nonmonetary assets, fair value is the basis of measurement. If the future cash flows are likely to change as a result of the exchange, then the transaction has commercial substance.

(a)

To record: To record the exchange for both H and W in accordance with generally accepted accounting principles.

To determine

(b)

To determine whether the exchange of Assets A and B lacks commercial substance.

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Answer 5

Chapter 10, Problem 9P

To determine

Exchange of Used asset and commercial substance: Sometimes an asset can be acquired in exchange of an existing used asset. The used asset would be exchanged at a price which may be more or less than the cost of the new asset. Any deficit resulting from the exchange is paid in cash. This exchange may result in a gain or loss on the disposal of the old asset, which should be recorded as part of the transaction. When the exchange is for nonmonetary assets, fair value is the basis of measurement. If the future cash flows are likely to change as a result of the exchange, then the transaction has commercial substance.

(a)

To record: To record the exchange for both H and W in accordance with generally accepted accounting principles.

To determine

(b)

To determine whether the exchange of Assets A and B lacks commercial substance.

Answer 6

Chapter 10, Problem 9P

To determine

Exchange of Used asset and commercial substance: Sometimes an asset can be acquired in exchange of an existing used asset. The used asset would be exchanged at a price which may be more or less than the cost of the new asset. Any deficit resulting from the exchange is paid in cash. This exchange may result in a gain or loss on the disposal of the old asset, which should be recorded as part of the transaction. When the exchange is for nonmonetary assets, fair value is the basis of measurement. If the future cash flows are likely to change as a result of the exchange, then the transaction has commercial substance.

(a)

To record: To record the exchange for both H and W in accordance with generally accepted accounting principles.

Answer 7

Chapter 10, Problem 9P

To determine

Exchange of Used asset and commercial substance: Sometimes an asset can be acquired in exchange of an existing used asset. The used asset would be exchanged at a price which may be more or less than the cost of the new asset. Any deficit resulting from the exchange is paid in cash. This exchange may result in a gain or loss on the disposal of the old asset, which should be recorded as part of the transaction. When the exchange is for nonmonetary assets, fair value is the basis of measurement. If the future cash flows are likely to change as a result of the exchange, then the transaction has commercial substance.

(a)

To record: To record the exchange for both H and W in accordance with generally accepted accounting principles.

Answer 8

To determine

(b)

To determine whether the exchange of Assets A and B lacks commercial substance.

Answer 9

To determine

(b)

To determine whether the exchange of Assets A and B lacks commercial substance.

Answer 10

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Answer 11

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Answer 13

Ch. 10 - Prob. 1Q Ch. 10 - Prob. 2Q Ch. 10 - Prob. 3Q Ch. 10 - Prob. 4Q Ch. 10 - Prob. 5Q Ch. 10 - Prob. 6Q Ch. 10 - 7. Burke Company has purchased two tracts of land....Ch. 10 - Prob. 8Q Ch. 10 - Prob. 9Q Ch. 10 - Prob. 10Q

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(b)

To determine whether the exchange of Assets A and B lacks commercial substance.

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(b) To determine whether the exchange of Assets A and B lacks commercial substance.

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(b)

To determine whether the exchange of Assets A and B lacks commercial substance.