Problem 10-9 On August 1, Shamrock, Inc. exchanged productive assets with Bridge

Question

Problem 10-9 On August 1, Shamrock, Inc. exchanged productive assets with Bridgeport, Inc. Shamrock's asset is referred to below as "Asset A," and Bridgeport is referred to as "Asset B.- The following facts pertain to these assets. Asset A Asset B Original cost Accumulated depreciation (to date of exchange) Fair value at date of exchange Cash paid by Shamrock, Inc. Cash received by Bridgeport, Inc. $117,120 $134,200 48,800 73,200 91,500 18,300 57,340 Assuming that the exchange of Assets A and B has commercial substance, record the exchange for both Shamrock, Inc. and Bridgeport, Inc. in accordance with generally accepted accounting principles. (Round answers to 0 decimal places, e.g. s,275. Credit account titles are automatically indented when amount is entered. De not indent manually. If no entry is required, select "No Entry" for the account Account Titles and Explanation Credit Assuming that the exchange of Assets A and B lacks commercial suistance, record thr exchange for both intermediate calculations to 5 decimal places, eg. 1.25124 and final answer to O decimal places e.g. 58,971. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry for the account titles and enter O for the amounts.) Account Titles and Explanation Debit

Explanation / Answer

Journal entries when asset exchanged is having commercial substance.

When asset is not having commercial substance

Has Commercial Substance Shamrock Inc. Date Particulars L.F Amount ($) Amount ($) Asset B (Fair value) 91,500 Accumulated depreciation (Book Value) 48,800 Asset A (Book Value) 117,120 Cash 18,300 Gain on sale of equipment (73,200- (117,120-48,800) 4,880 (For equipment exchanged) Bridgeport Date Particulars L.F Amount ($) Amount ($) Asset A (fair value) 73,200 Cash 18,300 Accumulated depreciation (Book Value) 57,340 Gain on exchange of equipment 14,640 Asset B (Book Value) 134,200 (For equipment exchanged)

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