FINANCIAL ACCOUNTINGLL W/CONNECT >IC<
4th Edition
ISBN: 9781259934773
Author: SPICELAND
Publisher: MCG
expand_more
expand_more
format_list_bulleted
Videos
Textbook Question
Chapter 7, Problem 7.12BE
Account for the exchange of long-term assets (LO7–6)
Flip Side of BE7–11
China Inn and Midwest Chicken exchanged assets. Midwest Chicken received equipment and gave a delivery truck. The fair value and book value of the delivery truck given were $31,000 and $32,600 (original cost of $37,000 less
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
On August 1, Tamarisk, Inc. exchanged productive assets with Vaughn, Inc. Tamarisk's asset is referred to below as "Asset A," and
Vaughn' is referred to as "Asset B." The following facts pertain to these assets.
Asset A
Asset B
Original cost
$126,720
$145,200
Accumulated depreciation (to date of exchange)
52,800
62,040
Fair value at date of exchange
79,200
99,000
Cash paid by Tamarisk, Inc.
19,800
Cash received by Vaughn, Inc.
19,800
(a)
Assuming that the exchange of Assets A and B has commercial substance, record the exchange for both Tamarisk, Inc. and Vaughn,
Inc. in accordance with generally accepted accounting principles. (Round answers to O decimal places, e.g. 5,275. Credit account titles
are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles
and enter O for the amounts. List all debit entries before credit entries.)
Account Titles and Explanation
Tamarisk, Inc's Books
Debit
Credit
Vaughn,…
1. Entity A, a government entity, acquires a machine for $10,000 on November 1, 20x1,
on account, and settles the account on January 3, 20x2. The machine is estimated
to have a useful life of 5 years and a residual value of 5% of cost. Entity A uses the
straight line method of depreciation. The exchange rates are as follows.
November 1, 20x1
$1 P50
December 31 20x1
$1 P40
January 3 20x2
$1P45
How much is the net foreign exchange gain (loss) recognized in surplus or deficit
from the transaction?|
a. P10.000
C. (P5 000)
b. (P10,000)
d. P5000
E10-10 Exchange of Assets Use the same information as in E10-9, except that the warehouse owned by Denver has a fair value of $28,000, and therefore, Denver agrees to pay Bristol $2,000 to complete the exchange.
Required: Assuming the exchange has commercial substance, prepare journal entries for Denver and Bristol to record the exchange.
Chapter 7 Solutions
FINANCIAL ACCOUNTINGLL W/CONNECT >IC<
Ch. 7 - Prob. 1RQCh. 7 - What are the two major categories of long-term...Ch. 7 - Prob. 3RQCh. 7 - Prob. 4RQCh. 7 - Prob. 5RQCh. 7 - Prob. 6RQCh. 7 - Equipment includes machinery used in manufacturing...Ch. 7 - Prob. 8RQCh. 7 - Prob. 9RQCh. 7 - Prob. 10RQ
Ch. 7 - Prob. 11RQCh. 7 - How do we decide whether to capitalize (record as...Ch. 7 - Explain the usual accounting treatment for repairs...Ch. 7 - Prob. 14RQCh. 7 - How is the dictionary definition different from...Ch. 7 - What factors must we estimate in allocating the...Ch. 7 - Prob. 17RQCh. 7 - Prob. 18RQCh. 7 - Prob. 19RQCh. 7 - Assume that Little King Sandwiches uses...Ch. 7 - Assume Little King Sandwiches depreciates a...Ch. 7 - Prob. 22RQCh. 7 - Prob. 23RQCh. 7 - What is book value? How do we compute the gain or...Ch. 7 - Prob. 25RQCh. 7 - Prob. 26RQCh. 7 - Prob. 27RQCh. 7 - Prob. 28RQCh. 7 - Determine the initial cost of land (LO71) Fresh...Ch. 7 - Prob. 7.2BECh. 7 - Prob. 7.3BECh. 7 - Compute research and development expense (LO72)...Ch. 7 - Prob. 7.5BECh. 7 - Explain the accounting definition of depreciation...Ch. 7 - Prob. 7.7BECh. 7 - Prob. 7.8BECh. 7 - Prob. 7.9BECh. 7 - Account for the sale of long-term assets (LO76)...Ch. 7 - Account for the exchange of long-term assets...Ch. 7 - Account for the exchange of long-term assets...Ch. 7 - Prob. 7.13BECh. 7 - Determine the impairment loss (LO78) Vegetarian...Ch. 7 - Prob. 7.15BECh. 7 - McCoys Fish House purchases a tract of land and an...Ch. 7 - Orion Flour Mills purchased a new machine and made...Ch. 7 - Prob. 7.3ECh. 7 - Prob. 7.4ECh. 7 - Prob. 7.5ECh. 7 - Prob. 7.6ECh. 7 - Prob. 7.7ECh. 7 - Prob. 7.8ECh. 7 - Prob. 7.9ECh. 7 - Determine depreciation for the first year under...Ch. 7 - Deformine depreciation under three methods (LO74)...Ch. 7 - Determine straight-line depreciation for partial...Ch. 7 - Determine straight-line depreciation for partial...Ch. 7 - Prob. 7.14ECh. 7 - Prob. 7.15ECh. 7 - Prob. 7.16ECh. 7 - Record the sole of equipment (L076) Abbott...Ch. 7 - Prob. 7.18ECh. 7 - Prob. 7.19ECh. 7 - Prob. 7.20ECh. 7 - Complete the accounting cycle using long-term...Ch. 7 - The Italian Bread Company purchased land as a...Ch. 7 - Prob. 7.2APCh. 7 - Prob. 7.3APCh. 7 - Prob. 7.4APCh. 7 - Determine depreciation under three methods (LO74)...Ch. 7 - Prob. 7.6APCh. 7 - Compute depreciation, amortization, and book value...Ch. 7 - Prob. 7.8APCh. 7 - Calculate and interpret ratios (LO77) Sub Station...Ch. 7 - Calculate and interpret ratios (LO77) University...Ch. 7 - Prob. 7.1BPCh. 7 - Determine the acquisition cost of equipment (LO71)...Ch. 7 - Prob. 7.3BPCh. 7 - Prob. 7.4BPCh. 7 - Determine depreciation under three methods (LO74)...Ch. 7 - Prob. 7.6BPCh. 7 - Prob. 7.7BPCh. 7 - Record the disposal of equipment (LO76) Flip Side...Ch. 7 - Calculate and Interpret ratios (LO77) Papas Pizza...Ch. 7 - Calculate and interpret ratios (LO77) Barry...Ch. 7 - Prob. 7.1APCPCh. 7 - Prob. 7.2APFACh. 7 - Prob. 7.3APFACh. 7 - Prob. 7.4APCACh. 7 - Prob. 7.5APECh. 7 - Written Communication At a recent luncheon, you...Ch. 7 - Earnings Management Edward L. Vincent is CFO of...
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Required information [The following information applies to the questions displayed below] Case A. Kapono Farms exchanged an old tractor for a newer model. The old tractor had a book value of $20,500 (original cost of $45,000 less accumulated depreciation of $24,500) and a fair value of $10,700. Kapono paid $37,000 cash to complete the exchange. The exchange has commercial substance. Case B. Kapono Farms exchanged 100 acres of farmland for similar land. The farmland given had a book value of $585,000 and a fair value of $870,000. Kapono paid $67,000 cash to complete the exchange. The exchange has commercial substance. Required: 1. What is the amount of gain or loss that Kapono would recognize on the exchange? What is the initial value of the new land? 2. Assume the fair value of the farmland given is $468,000 instead of $870,000. What is the amount of gain or loss that Kapono would recognize on the exchange? What is the initial value of the new land? 3. Assume the same facts as…arrow_forwardFoxtrot Co. exchanged equipment and $17,100 cash for similar equipment. The book value and the fair value of the old equipment were $81,000 and $91,700, respectively. Assuming that the exchange lacks commercial substance, Foxtrot would record a gain/(loss) on exchange of assets in the amount of: Multiple Choice $(10,700). $0. $10,700. $27,800.arrow_forwardOn August 1, Crane, Inc. exchanged productive assets with Cheyenne, Inc. Crane’s asset is referred to below as “Asset A,” and Cheyenne’ is referred to as “Asset B.” The following facts pertain to these assets. Asset A Asset B Original cost $117,120 $134,200 Accumulated depreciation (to date of exchange) 48,800 57,340 Fair value at date of exchange 73,200 91,500 Cash paid by Crane, Inc. 18,300 Cash received by Cheyenne, Inc. 18,300 Assuming that the exchange of Assets A and B lacks commercial substance, record the exchange for both Crane, Inc. and Cheyenne, Inc. in accordance with generally accepted accounting principles. Account Titles and Explanation Debit Credit Crane, Inc.’s Books Cheyenne, Inc.’s Booksarrow_forward
- Horton Stores exchanged land and cash of $5,000 for similar land. The book value and the fair value of the land were $90,000 and $100,000, respectively. Assuming that the exchange has commercial substance, Horton would record land—new and a gain/(loss) on exchange of assets in the amounts of: Land Gain/(loss) a. $ 105,000 $ 0 b. $ 105,000 $ 10,000 c. $ 95,000 $ 0 d. $ 95,000 $ 10,000 Multiple Choice Option A Option B Option C Option Darrow_forwardA company exchanged land and cash of $4,000 for similar land. The book value and the fair value of the land were $89,900 and $100,600, respectively. Assuming that the exchange has commercial substance, the company would record land-new and a gain on exchange of assets in the amounts of: a. b. C. d. Land $ 104,600 $ 104,600 $ 93,900 $ 93,900 Multiple Choice O O Option a. Option b. Option d. Option c. Gain $10,700 $ 10,700arrow_forwardRequired information [The following information applies to the questions displayed below.] Case A. Kapono Farms exchanged an old tractor for a newer model. The old tractor had a book value of $13,500 (original cost of $31,000 less accumulated depreciation of $17,500) and a fair value of $9,300. Kapono paid $23,000 cash to complete the exchange. The exchange has commercial substance. Case B. Kapono Farms exchanged 100 acres of farmland for similar land. The farmland given had a book value of $515,000 and a fair value of $730,000. Kapono paid $53,000 cash to complete the exchange. The exchange has commercial substance. Required: 1. What is the amount of gain or loss that Kapono would recognize on the exchange? What is the initial value of the new tractor? 2. Assume the fair value of the old tractor is $17,000 instead of $9,300. What is the amount of gain or loss that Kapono would recognize on the exchange? What is the initial value of the new tractor? Complete this question by entering…arrow_forward
- China Inn and Midwest Chicken exchanged assets. Midwest Chicken received restaurant equipment and gave delivery equipment. The fair value and book value of the delivery equipment given were $28,600 and $31,400 (original cost of $35,400 less accumulated depreciation of $4,000), respectively. To equalize market values of the exchanged assets, Midwest Chicken received $8,600 in cash from China Inn. Record the gain or loss for Midwest Chicken on the exchange of the equipment. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.) View transaction list Journal entry worksheet 1 Record the gain or loss for Midwest Chicken on the exchange of the equipment. Note: Enter debits before credits. Transaction 1 General Journal Debit Creditarrow_forwardChina Inn and Midwest Chicken exchanged assets. Midwest Chicken received restaurant equipment and gave delivery equipment. The fair value and book value of the delivery equipment given were $30,400 and $32,300 (original cost of $36,600 less accumulated depreciation of $4,300), respectively. To equalize market values of the exchanged assets, Midwest Chicken received $8,900 in cash from China Inn. Record the gain or loss for Midwest Chicken on the exchange of the equipment. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" In the first account fleld.) View transaction list Journal entry worksheet 1 Record the gain or loss for Midwest Chicken on the exchange of the equipment. Note: Enter debits before credits. Transaction 1 Record entry General Journal Clear entry Debit Credit View general journalarrow_forwardBloomington Inc. exchanged land for equipment and $2,600 in cash. The book value and the fair value of the land were $105,500 and $89,100, respectively.Assuming that the exchange has commercial substance, Bloomington would record equipment and a gain/(loss)on exchange of assets in the amounts of: Equipment Gain/(loss) a. $ 86,500 $ 2,600 b. $ 105,500 $ (2,600 ) c. $ 86,500 $ (16,400 ) d. None of these answer choices are correct. Option C Option D Option A Option Barrow_forward
- V6arrow_forwardOCD exchanged old realty for new like-kind realty. OCD’s adjusted basis in the old realty was $31,700 ($60,000 initial cost − $28,300 accumulated depreciation), and its FMV was $48,000. Because the new realty was worth only $45,000, OCD received $3,000 cash in addition to the new realty. Required: a-1. Compute OCD's realized gain. a-2. Determine the amount and character of any recognized gain. b. Compute OCD’s basis in its new realty.arrow_forwardChina Inn and Midwest Chicken exchanged assets. China Inn received delivery equipment and gave restaurant equipment. The fair value and book value of the restaurant equipment were $22,500 and $15,000 (original cost of $40,000 less accumulated depreciation of $25,000), respectively. To equalize market values of the exchanged assets, China Inn paid $7,600 in cash to Midwest Chicken. Record the gain or loss for China Inn on the exchange of the equipment. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.) View transaction list View journal entry worksheet No 1 Transaction 1 Loss Cash General Journal Equipment (Restaurant) Debit 7,600 Credit 40,000arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:Cengage Learning
Property, Plant and Equipment (PP&E) - Introduction to PPE; Author: Gleim Accounting;https://www.youtube.com/watch?v=e_Hx-e-h9M4;License: Standard Youtube License