Gain or loss on the exchange after bringing accumulated depreciation upto the date of transaction. Given Information: Cost of machine acquired on January 1, 2010 is $260,000. Useful life of machinery is 10 years. Scrap value of the machinery is $20,000. On August 1, 2015; old machine was exchanged for new machine. Market value of new machinery is $157,250. Cash received mounted to $27,750. Fair value of old machine is $185,000.

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Answer 1

Question

Chapter 11, Problem 11.31E

a.

To determine

Gain or loss on the exchange after bringing accumulated depreciation upto the date of transaction.

Given Information:

Cost of machine acquired on January 1, 2010 is $260,000.

Useful life of machinery is 10 years.

Scrap value of the machinery is $20,000.

On August 1, 2015; old machine was exchanged for new machine.

Market value of new machinery is $157,250.

Cash received mounted to $27,750.

Fair value of old machine is $185,000.

b.

To determine

To prepare: Journal entry to record the exchange is as follows:

Given Information:

Cost of machine acquired on January 1, 2010 is $260,000.

Useful life of machinery is 10 years.

Scrap value of the machinery is $20,000.

On August 1, 2015; old machine was exchanged for new machine.

Market value of new machinery is $157,250.

Cash received mounted to $27,750.

Fair value of old machine is $185,000.

c.

To determine

To prepare: journal entry to record exchange if there is no commercial substance in the exchange.

Given Information:

Cost of machine acquired on January 1, 2010 is $260,000.

Useful life of machinery is 10 years.

Scrap value of the machinery is $20,000.

On August 1, 2015; old machine was exchanged for new machine.

Market value of new machinery is $157,250.

Cash received mounted to $27,750.

Fair value of old machine is $185,000.

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Answer 2

Question

Chapter 11, Problem 11.31E

a.

To determine

Gain or loss on the exchange after bringing accumulated depreciation upto the date of transaction.

Given Information:

Cost of machine acquired on January 1, 2010 is $260,000.

Useful life of machinery is 10 years.

Scrap value of the machinery is $20,000.

On August 1, 2015; old machine was exchanged for new machine.

Market value of new machinery is $157,250.

Cash received mounted to $27,750.

Fair value of old machine is $185,000.

b.

To determine

To prepare: Journal entry to record the exchange is as follows:

Given Information:

Cost of machine acquired on January 1, 2010 is $260,000.

Useful life of machinery is 10 years.

Scrap value of the machinery is $20,000.

On August 1, 2015; old machine was exchanged for new machine.

Market value of new machinery is $157,250.

Cash received mounted to $27,750.

Fair value of old machine is $185,000.

c.

To determine

To prepare: journal entry to record exchange if there is no commercial substance in the exchange.

Given Information:

Cost of machine acquired on January 1, 2010 is $260,000.

Useful life of machinery is 10 years.

Scrap value of the machinery is $20,000.

On August 1, 2015; old machine was exchanged for new machine.

Market value of new machinery is $157,250.

Cash received mounted to $27,750.

Fair value of old machine is $185,000.

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Answer 3

Question

Chapter 11, Problem 11.31E

a.

To determine

Gain or loss on the exchange after bringing accumulated depreciation upto the date of transaction.

Given Information:

Cost of machine acquired on January 1, 2010 is $260,000.

Useful life of machinery is 10 years.

Scrap value of the machinery is $20,000.

On August 1, 2015; old machine was exchanged for new machine.

Market value of new machinery is $157,250.

Cash received mounted to $27,750.

Fair value of old machine is $185,000.

b.

To determine

To prepare: Journal entry to record the exchange is as follows:

Given Information:

Cost of machine acquired on January 1, 2010 is $260,000.

Useful life of machinery is 10 years.

Scrap value of the machinery is $20,000.

On August 1, 2015; old machine was exchanged for new machine.

Market value of new machinery is $157,250.

Cash received mounted to $27,750.

Fair value of old machine is $185,000.

c.

To determine

To prepare: journal entry to record exchange if there is no commercial substance in the exchange.

Given Information:

Cost of machine acquired on January 1, 2010 is $260,000.

Useful life of machinery is 10 years.

Scrap value of the machinery is $20,000.

On August 1, 2015; old machine was exchanged for new machine.

Market value of new machinery is $157,250.

Cash received mounted to $27,750.

Fair value of old machine is $185,000.

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Answer 4

Question

Chapter 11, Problem 11.31E

a.

To determine

Gain or loss on the exchange after bringing accumulated depreciation upto the date of transaction.

Given Information:

Cost of machine acquired on January 1, 2010 is $260,000.

Useful life of machinery is 10 years.

Scrap value of the machinery is $20,000.

On August 1, 2015; old machine was exchanged for new machine.

Market value of new machinery is $157,250.

Cash received mounted to $27,750.

Fair value of old machine is $185,000.

b.

To determine

To prepare: Journal entry to record the exchange is as follows:

Given Information:

Cost of machine acquired on January 1, 2010 is $260,000.

Useful life of machinery is 10 years.

Scrap value of the machinery is $20,000.

On August 1, 2015; old machine was exchanged for new machine.

Market value of new machinery is $157,250.

Cash received mounted to $27,750.

Fair value of old machine is $185,000.

c.

To determine

To prepare: journal entry to record exchange if there is no commercial substance in the exchange.

Given Information:

Cost of machine acquired on January 1, 2010 is $260,000.

Useful life of machinery is 10 years.

Scrap value of the machinery is $20,000.

On August 1, 2015; old machine was exchanged for new machine.

Market value of new machinery is $157,250.

Cash received mounted to $27,750.

Fair value of old machine is $185,000.

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Answer 5

Chapter 11, Problem 11.31E

a.

To determine

Gain or loss on the exchange after bringing accumulated depreciation upto the date of transaction.

Given Information:

Cost of machine acquired on January 1, 2010 is $260,000.

Useful life of machinery is 10 years.

Scrap value of the machinery is $20,000.

On August 1, 2015; old machine was exchanged for new machine.

Market value of new machinery is $157,250.

Cash received mounted to $27,750.

Fair value of old machine is $185,000.

b.

To determine

To prepare: Journal entry to record the exchange is as follows:

Given Information:

Cost of machine acquired on January 1, 2010 is $260,000.

Useful life of machinery is 10 years.

Scrap value of the machinery is $20,000.

On August 1, 2015; old machine was exchanged for new machine.

Market value of new machinery is $157,250.

Cash received mounted to $27,750.

Fair value of old machine is $185,000.

c.

To determine

To prepare: journal entry to record exchange if there is no commercial substance in the exchange.

Given Information:

Cost of machine acquired on January 1, 2010 is $260,000.

Useful life of machinery is 10 years.

Scrap value of the machinery is $20,000.

On August 1, 2015; old machine was exchanged for new machine.

Market value of new machinery is $157,250.

Cash received mounted to $27,750.

Fair value of old machine is $185,000.

Answer 6

Chapter 11, Problem 11.31E

a.

To determine

Gain or loss on the exchange after bringing accumulated depreciation upto the date of transaction.

Given Information:

Cost of machine acquired on January 1, 2010 is $260,000.

Useful life of machinery is 10 years.

Scrap value of the machinery is $20,000.

On August 1, 2015; old machine was exchanged for new machine.

Market value of new machinery is $157,250.

Cash received mounted to $27,750.

Fair value of old machine is $185,000.

Answer 7

Chapter 11, Problem 11.31E

a.

To determine

Gain or loss on the exchange after bringing accumulated depreciation upto the date of transaction.

Given Information:

Cost of machine acquired on January 1, 2010 is $260,000.

Useful life of machinery is 10 years.

Scrap value of the machinery is $20,000.

On August 1, 2015; old machine was exchanged for new machine.

Market value of new machinery is $157,250.

Cash received mounted to $27,750.

Fair value of old machine is $185,000.

Answer 8

b.

To determine

To prepare: Journal entry to record the exchange is as follows:

Given Information:

Cost of machine acquired on January 1, 2010 is $260,000.

Useful life of machinery is 10 years.

Scrap value of the machinery is $20,000.

On August 1, 2015; old machine was exchanged for new machine.

Market value of new machinery is $157,250.

Cash received mounted to $27,750.

Fair value of old machine is $185,000.

Answer 9

b.

To determine

To prepare: Journal entry to record the exchange is as follows:

Given Information:

Cost of machine acquired on January 1, 2010 is $260,000.

Useful life of machinery is 10 years.

Scrap value of the machinery is $20,000.

On August 1, 2015; old machine was exchanged for new machine.

Market value of new machinery is $157,250.

Cash received mounted to $27,750.

Fair value of old machine is $185,000.

Answer 10

c.

To determine

To prepare: journal entry to record exchange if there is no commercial substance in the exchange.

Given Information:

Cost of machine acquired on January 1, 2010 is $260,000.

Useful life of machinery is 10 years.

Scrap value of the machinery is $20,000.

On August 1, 2015; old machine was exchanged for new machine.

Market value of new machinery is $157,250.

Cash received mounted to $27,750.

Fair value of old machine is $185,000.

Answer 11

c.

To determine

To prepare: journal entry to record exchange if there is no commercial substance in the exchange.

Given Information:

Cost of machine acquired on January 1, 2010 is $260,000.

Useful life of machinery is 10 years.

Scrap value of the machinery is $20,000.

On August 1, 2015; old machine was exchanged for new machine.

Market value of new machinery is $157,250.

Cash received mounted to $27,750.

Fair value of old machine is $185,000.

Answer 12

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Answer 13

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Answer 14

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Answer 15

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Solution Summary: The author calculates gain or loss on the exchange after bringing accumulated depreciation up to the date of transaction.

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