aded in a manual pressng machine for an automated pressing machine and oave s420

ID: 2596896 • Letter: A

Question

aded in a manual pressng machine for an automated pressing machine and oave s420 cash.The old machine cost $6900 and had a ost book value ca Which of the following is the correct journal entry to record the exchange assuming commercial substance O Equipment 646000 Accumulated Depreciation Equipment Cash 135000 469000 42000 Equipment Loss on Disposal Accumulated Depreciation 317000 59000 135000 469000 42000 Equipment Cash Cash Equipment Loss on Disposal Accumulated Depreclation 42000 275000 59000 135000 511000 Equipment

Explanation / Answer

Loss on exchange = Book Value – fair value

= 334,000 – 275,000

Loss on exchange = $59,000

Accumulated depreciation = Cost – Book value

= 469,000 – 334,000

Accumulated depreciation = 135,000

Entry

Equipment (New) (Balancing figure)

317,000

Accumulated Depreciation

135,000

Loss on exchange

59,000

Equipment (Old)

469,000

Cash

42,000