3 Sun 1:58 PM Angelica Silas a rk Chapter 10-36 Help Save& Exit Submit Check my

Question

3 Sun 1:58 PM Angelica Silas a rk Chapter 10-36 Help Save& Exit Submit Check my work Cedric Compan $189,000 (original cost of $419,000 less $230,000 in accumulated depreciation) and its fair velue wes Cedric paid $61000 to complete the exchange which has commercial substance. ny recenty traded in an older model computer for a new model. The old model's book value was Required: Prepere the journal entry to record the exchange. (f no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet Record the exchange of assets debits before 8

Explanation / Answer

since the exchange lacks commercial substance,

value of new equipment = fair value of old equipment + cash paid

=>210,000+61,000

=>$271,000.

gain on exchange = fair value - book value

=>210,000-189,000

=>21,000.

the following is the journal entry:

sno account debit credit 1 Equipment - new 271,000 Accumulated depreciation 230,000 ...............To Cash 61,000 ...............To Equipment - old 419,000 ...............To gain 21,000

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