(Nonmonetary Exchange) Susquehanna Corporation wishes toexchange a machine used
ID: 2457531 • Letter: #
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(Nonmonetary Exchange) Susquehanna Corporation wishes toexchange a machine used in its operations. Susquuehanna has received the following offers fromother companies in the industry. 1 Choctaw Company offered to exchange a similarmachine plus $23,000 (the exchange has commercial substance for bothparties) 2 Powhatan Company offered to exchange a similarmachine (the exchange lacks commercial substance for both parties) 3 Shawnee Company offered to exchange a similarmachine, but wanted $8,000 in addition to Susquehanna's machine (the exchangehas commercial substance for both parties) In addition, Susquehanna contactedSeminole Corporation, a dealer in macines. To obtain anew machine, Susquehana must pay $93,000 inaddition to trading in its old machine. Susquehanna Choctaw Powhatan Shawnee Seminole Machine Cost 160,000 120,000 147,000 160,000 130,000 Accumulated depreciation 50,000 45,000 71,000 75,000 0 Fair Value 92,000 69,000 92,000 100,000 185,000 Instuctions: for each of the four independentsituations, prepare the journal entries to record the exchange onthe books of each company (round to nearestdollar) (Nonmonetary Exchange) Susquehanna Corporation wishes toexchange a machine used in its operations. Susquuehanna has received the following offers fromother companies in the industry. 1 Choctaw Company offered to exchange a similarmachine plus $23,000 (the exchange has commercial substance for bothparties) 2 Powhatan Company offered to exchange a similarmachine (the exchange lacks commercial substance for both parties) 3 Shawnee Company offered to exchange a similarmachine, but wanted $8,000 in addition to Susquehanna's machine (the exchangehas commercial substance for both parties) In addition, Susquehanna contactedSeminole Corporation, a dealer in macines. To obtain anew machine, Susquehana must pay $93,000 inaddition to trading in its old machine. Susquehanna Choctaw Powhatan Shawnee Seminole Machine Cost 160,000 120,000 147,000 160,000 130,000 Accumulated depreciation 50,000 45,000 71,000 75,000 0 Fair Value 92,000 69,000 92,000 100,000 185,000 Instuctions: for each of the four independentsituations, prepare the journal entries to record the exchange onthe books of each company (round to nearestdollar)Explanation / Answer
I will post answers for the other questions after you rate this!. 1. Susquehanna Corporation Cash Dr. 23,000 Machinery Dr 69,000 Acc.Depreciation Dr. 50,000 Loss on Machinery Dr. 18,000* Machinery 160,000 *Computation of loss: Book value $110,000 Fair value (92,000) Loss $18,000 Choctaw Company Machinery. Dr. 92,000 Accumulated Depreciation. Dr. 45,000 Loss on Exchange of Machinery Dr. 6,000* Cash . 23,000 Machinery . 120,000 *Computation of loss: Book value $ 75,000 Fair value (69,000) Loss $6,000 2.Susquehanna Corporation Machinery Dr. 92,000 AccumulatedDepreciation Dr. 50,000 Loss on Exchange of Machinery Dr.18,000 Machinery 160,000 Powhatan Company Machinery ($92,000 – $16,000) Dr.76,000* AccumulatedDepreciation. Dr . 71,000 Machinery 147,000 *Computation of gain deferred: Fair value $92,000 Book value (76,000) Gain deferred $16,000 3. Susquehanna Corporation Machinery Dr. 100,000 AccumulatedDepreciation Dr. 50,000 Loss on Exchange of machinery Dr. 18,000 Machinery 160,000 Cash 8,000 Shawnee Company Machinery. Dr.92,000 AccumulatedDepreciation Dr.75,000 Cash Dr. 8,000 Machinery 160,000 Gain on Machinery . 15,000* *Fair value $100,000 Book value (85,000) Gain $ 15,000 4.Susquehanna Corporation Machinery Dr. 185,000 Accumulated Depreciation Dr. 50,000 Loss on machinery. Dr. 18,000 Machinery 60,000 Cash 93,000 Seminole Company Cash Dr.93,000 Used Machine Inventory. Dr. 92,000 Sales 185,000 Cost of Goods Sold. Dr.130,000 Inventory 130,000
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