Teal Company exchanged equipment used in its manufacturing operations plus $3,12
ID: 2583148 • Letter: T
Question
Teal Company exchanged equipment used in its manufacturing operations plus $3,120 in cash for similar equipment used in the operations of Flint Company. The following information pertains to the exchange. Teal Co. Flint Co. Equipment (cost) $29,120 $29,120 Accumulated depreciation 19,760 10,400 Fair value of equipment 13,000 16,120 Cash given up 3,120 Prepare the journal entries to record the exchange on the books of both companies. Assume that the exchange lacks commercial substance -Prepare the journal entries to record the exchange on the books of both companies. Assume that the exchange has commercial substance.
Explanation / Answer
Answer.
Less Book Value of equipment
Teal (29120-19760)
Flint (29120-10400)
New Equipment = Cash Paid + Fair value of old
Teal :
Equipment New (3120 +13000) 16120
Accumulated Depreciation 19760
Cash 3120
Equipment Old 29120
Gain on exchange 3640
Flint Comp nay :
Equipment ( New) 13000
Accumulated Depreciation 10400
Cash 3120
Loss on exchange 2600
Equipment Old 29120
Teal Flint Fair value of Equipment 13000 16120Less Book Value of equipment
Teal (29120-19760)
Flint (29120-10400)
(9360) (18720) Gain Or Loss on Exchange 3640 Gain (2600) LossRelated Questions
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