Concept explainers
a.
To prepare:
Given Information:
Cash paid in exchange of chocolate mixing machine is $31,500.
Fair value of chocolate mixing machine exchanged is $437,500.
Book value of machine is $500,000.
Historical cost of the machine is $1,135,000.
Fair value of new mixing machine is $469,000.
Book value of new machine is $380,000.
b.
To prepare: Journal entry to record the exchange.
Given Information:
Cash paid in exchange of chocolate mixing machine is $31,500.
Fair value of chocolate mixing machine exchanged is $562,500.
Book value of machine is $500,000.
Historical cost of the machine is $1,135,000.
Accumulated depreciation is $635,000.
Fair value of new mixing machine is $594,000.
Book value of new machine is $380,000
c.
To prepare: Journal entry to record the exchange.
Given Information:
Cash paid in exchange of chocolate mixing machine is $31,500.
Fair value of chocolate mixing machine exchanged is $562,500.
Book value of machine is $500,000.
Historical cost of the machine is $1,135,000.
Accumulated depreciation is $635,000.
Fair value of new mixing machine is $594,000.
Book value of new machine is $380,000
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Check out a sample textbook solutionChapter 11 Solutions
Intermediate Accounting (2nd Edition)
- Bryn Enterprises exchanged old trucks (cost $70,000 less $27,000 accumulated depreciation) plus cash of $20,000 for a new semi-truck. The old trucks had a fair market value of $23,000. Prepare the entry to record the exchange of assets by Bryn Enterprises.arrow_forwardWindsor Company purchased an electric wax melter on April 30, 2025, by trading in its old gas model and paying the balance in cash. The following data relate to the purchase. List price of new melter Cash paid Cost of old melter (5-year life, $700 salvage value) Accumulated depreciation-old melter (straight-line) Secondhand fair value of old melter No. Account Titles and Explanation (a) Exchange has commercial substance: (To record current depreciation.) Prepare the journal entries necessary to record this exchange, assuming that the exchange (a) has commercial substance, and (b) lacks commercial substance. Windsor's fiscal year ends on December 31, and depreciation has been recorded through December 31, 2024. (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. List all debit entries before credit entries.) (To record exchange of the equipment.)…arrow_forwardMill Creek Golf Club, Inc. purchased a computer for $2,900, debiting Computer Equipment. During 2022 and 2023, Mill Creek Golf Club, Inc. recorded total depreciation of $2,300 on the computer. On January 1, 2024, Mill Creek Golf Club, Inc. traded in the computer for a new one, paying $2,700 cash. The fair market value of the new computer is $4,500. Journalize Mill Creek Golf Club, Inc.'s exchange of computers. Assume the exchange had commercial substance. Let's begin by calculating the gain or loss on the exchange of computer equipment on January 1. Market value of assets received Less: Book value of asset exchanged Cash paid Gain or (Loss) Journalize Mill Creek Golf Club, Inc.'s exchange of computers. (Record a single compound journal entry. Record debits first, then credits. Select the explanation on the last line of the journal entry table.) Date Jan. 1 Accounts and Explanation Debit Creditarrow_forward
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- Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax College