INTERMEDIATE ACCOUNTING EXTRA CREDIT Part I: Hodge Co. exchanged Building 24 whi

Question

INTERMEDIATE ACCOUNTING EXTRA CREDIT Part I: Hodge Co. exchanged Building 24 which has an appraised value of $6,400,000, a cost of $10 120,000, and accumulated depreciation of $4,800,000 for Building M belonging to Fine Co Building M has an appraised value of $6,016,000, a cost of $12,040,000, and accumulated depreciation of $6,336,000. The correct amount of cash was also paid. Assume depreciation has already been updated. Instructions Prepare the entries on both companies books assuming substance. Show a check of the amount recorded for Building M on Hodge's books. (Round to the exchange had no commercial the nearest dollar.) Fine Co

Explanation / Answer

Answer:

In the Books of Hedge Co.

Jouranal

Building (N) A/c   Dr.         6016000

Acc. Depreciation A/c Dr 4800000

      To Building (old) A/c    10120000

       To Cash A/c                  696000

(Being assets exchanged)

In the Books of Fin co.

Building New) A/c    dr.   6400000

Acc. Depreciation A/c Dr. 6336000

       To Building(old) A/c   12040000

       To Cash A/c                 696000

Working Note Particular Amount Cost of Building 10120000 Accumulated Dep 4800000 WDV 5320000 Appraised cost 6400000 Cash received 384000 WDV 5320000 Cash received 384000 Asstes to be recoreded 5704000

Jouranal

Building (N) A/c   Dr.         6016000

Acc. Depreciation A/c Dr 4800000

      To Building (old) A/c    10120000

       To Cash A/c                  696000

(Being assets exchanged)

In the Books of Fin co.

Building New) A/c    dr.   6400000

Acc. Depreciation A/c Dr. 6336000

       To Building(old) A/c   12040000

       To Cash A/c                 696000

(Being Assets Exchanged)

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