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Problem 10-9-Intenet Explorer htips/Fedugen willeyplus.com File Edt View Favorites Tooh Help Problem 10-9 pearch On August A," and 1, Bonita, Inc. exchanged productive assets with Windsoe, Inc. Bonita's asset is referred to below as "Asset is referred to as Asset B. The folkowing facts pertain to these assets. Asset A Asset Original cost Accumulated depreciation Fair value at date of exchange $107,520 $123,200 ,800 52,640 67,200 84,000 (to date of exchange)44 Cash paid by Bonita, Inc. Cash received by Windsor, 1c 16,800 16,800 Assuming that the exchange of Assets A and B has coemmercial substance, record the exchange for both Bonita, Inc. and 5,275, Credit account titles are automatically indented when amount is entered. Do not indent manasalty Windsor, Inc. in accordance with generally accepted accounting principles,(Roamd answers to 0 decial places, e these assets. no entry is required, select No Entry" for the account titles and enter o for the amounts) Aocount Titles and Explanation Debit Crecht les(Round answen Assuming that the exchange of Assets A and B lacks commercial substance, recoed the exchange for both Bonita, Inc. and Windsor, Inc. in accordance with generally accepted accounting principles. (Round intermediate calulations to declmal places, e.g. 1.zs12-4 and final answer to 0 decimal places ng. 58 971. Credit acceumt titles are Entry" for the account titles and enter 0 for the amoonts) Account Titles and Explanation matically inden ied when amount is enteresd, Do not indieat imanually. If no entry is reguired, select No Debit Credit

Explanation / Answer

When the exchange of Assets A and B has commercial substance;

Bonita Inc.’s Books

Assets B

$84000

Accumulated depreciation-Assets A

$44800

     Assets A

$107520

     Cash

$16800

     Gain on disposal of Assets A

$4480

(To record exchange & gain on disposal)

Working Note;

Gain on disposal will be calculated as follow;

Original cost of asset A

$107520

Less: Accumulated depreciation

($44800)

Book value of asset A

$62720

Add: Cash paid by Bonita Inc.

$16800

Amount to be recorded as exchange

$79520

Less: Fair value of asset obtained (Asset B)

($84000)

Gain on disposal ($84000 - $79520)

$4480

Windsor Inc.’s Books

Assets A

$67200

Cash

$16800

Accumulated depreciation-Asset B

$52640

     Asset B

$123200

     Gain on disposal of Assets B

$13440

(To record exchange & gain on disposal)

Working Note;

Gain on disposal will be calculated as follow;

Original cost of asset B

$123200

Less: Accumulated depreciation

($52640)

Book value of asset B

$70560

Less: Cash received from Bonita Inc.

$16800

Amount to be recorded as exchange

$53760

Less: Fair value of asset obtained (Asset A)

($67200)

Gain on disposal ($67200 - $53760)

$13440

Bonita Inc.’s Books

Assets B

$84000

Accumulated depreciation-Assets A

$44800

     Assets A

$107520

     Cash

$16800

     Gain on disposal of Assets A

$4480

(To record exchange & gain on disposal)

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