Exchange of fixed assets: It refers to the purchase of new fixed assets in exchange of old fixed assets. C ommercial substance: It means that the exchange of the fixed asset cause changes in the future cash flows as more revenue will generate from the new fixed asset due to an increase in its productivity. Thus, if the revenue earned or expenses incurred changes in the future due to the exchange of fixed assets, then it will be referred as the exchange has a commercial substance. To journalize: the current depreciation of the old equipment to the date of trade-in.

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Answer 1

Question

Chapter 9, Problem 9.27EX

(A)

To determine

Exchange of fixed assets: It refers to the purchase of new fixed assets in exchange of old fixed assets.

Commercial substance: It means that the exchange of the fixed asset cause changes in the future cash flows as more revenue will generate from the new fixed asset due to an increase in its productivity. Thus, if the revenue earned or expenses incurred changes in the future due to the exchange of fixed assets, then it will be referred as the exchange has a commercial substance.

To journalize: the current depreciation of the old equipment to the date of trade-in.

(B)

To determine

To journalize: the exchange transaction on July 1.

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Answer 2

Question

Chapter 9, Problem 9.27EX

(A)

To determine

Exchange of fixed assets: It refers to the purchase of new fixed assets in exchange of old fixed assets.

Commercial substance: It means that the exchange of the fixed asset cause changes in the future cash flows as more revenue will generate from the new fixed asset due to an increase in its productivity. Thus, if the revenue earned or expenses incurred changes in the future due to the exchange of fixed assets, then it will be referred as the exchange has a commercial substance.

To journalize: the current depreciation of the old equipment to the date of trade-in.

(B)

To determine

To journalize: the exchange transaction on July 1.

Expert Solution & Answer

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See solution

Answer 3

Question

Chapter 9, Problem 9.27EX

(A)

To determine

Exchange of fixed assets: It refers to the purchase of new fixed assets in exchange of old fixed assets.

Commercial substance: It means that the exchange of the fixed asset cause changes in the future cash flows as more revenue will generate from the new fixed asset due to an increase in its productivity. Thus, if the revenue earned or expenses incurred changes in the future due to the exchange of fixed assets, then it will be referred as the exchange has a commercial substance.

To journalize: the current depreciation of the old equipment to the date of trade-in.

(B)

To determine

To journalize: the exchange transaction on July 1.

Expert Solution & Answer

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Answer 4

Question

Chapter 9, Problem 9.27EX

(A)

To determine

Exchange of fixed assets: It refers to the purchase of new fixed assets in exchange of old fixed assets.

Commercial substance: It means that the exchange of the fixed asset cause changes in the future cash flows as more revenue will generate from the new fixed asset due to an increase in its productivity. Thus, if the revenue earned or expenses incurred changes in the future due to the exchange of fixed assets, then it will be referred as the exchange has a commercial substance.

To journalize: the current depreciation of the old equipment to the date of trade-in.

(B)

To determine

To journalize: the exchange transaction on July 1.

Expert Solution & Answer

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Answer 5

Chapter 9, Problem 9.27EX

(A)

To determine

Exchange of fixed assets: It refers to the purchase of new fixed assets in exchange of old fixed assets.

Commercial substance: It means that the exchange of the fixed asset cause changes in the future cash flows as more revenue will generate from the new fixed asset due to an increase in its productivity. Thus, if the revenue earned or expenses incurred changes in the future due to the exchange of fixed assets, then it will be referred as the exchange has a commercial substance.

To journalize: the current depreciation of the old equipment to the date of trade-in.

(B)

To determine

To journalize: the exchange transaction on July 1.

Answer 6

Chapter 9, Problem 9.27EX

(A)

To determine

Exchange of fixed assets: It refers to the purchase of new fixed assets in exchange of old fixed assets.

Commercial substance: It means that the exchange of the fixed asset cause changes in the future cash flows as more revenue will generate from the new fixed asset due to an increase in its productivity. Thus, if the revenue earned or expenses incurred changes in the future due to the exchange of fixed assets, then it will be referred as the exchange has a commercial substance.

To journalize: the current depreciation of the old equipment to the date of trade-in.

Answer 7

Chapter 9, Problem 9.27EX

(A)

To determine

Exchange of fixed assets: It refers to the purchase of new fixed assets in exchange of old fixed assets.

Commercial substance: It means that the exchange of the fixed asset cause changes in the future cash flows as more revenue will generate from the new fixed asset due to an increase in its productivity. Thus, if the revenue earned or expenses incurred changes in the future due to the exchange of fixed assets, then it will be referred as the exchange has a commercial substance.

To journalize: the current depreciation of the old equipment to the date of trade-in.

Answer 8

(B)

To determine

To journalize: the exchange transaction on July 1.

Answer 9

(B)

To determine

To journalize: the exchange transaction on July 1.

Answer 10

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Answer 11

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Answer 12

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Answer 13

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Solution Summary: The author explains that the exchange of fixed assets causes changes in the future cash flows as more revenue will generate from the new fixed asset.

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