Athens Inc. exchanged machinery with an appraised value of $ 1,170,000, a recorded cost of $1,800,000 and accumulated depreciation of $900,000, for machinery that Sparta Corp. owns. Sparta's machinery has an appraised value of $1,140,000, a recorded cost of $ 2,160,000, and accumulated depreciation of $ 1,188,000. Sparta also gave Athens $ 30,000 in the exchange. Assume depreciation has been updated to the date of exchange. Required: a ) Prepare the entries on both companies' books assuming that the transaction has commercial substance. b) Prepare the entries on both companies' books assuming that the transaction lacks commercial substance.

Athens Inc. exchanged machinery with an appraised value of $ 1,170,000, a recorded cost of $1,800,000 and accumulated depreciation of $900,000, for machinery that Sparta Corp. owns. Sparta's machinery has an appraised value of $1,140,000, a recorded cost of $ 2,160,000, and accumulated depreciation of $ 1,188,000. Sparta also gave Athens $ 30,000 in the exchange. Assume depreciation has been updated to the date of exchange. Required: a ) Prepare the entries on both companies' books assuming that the transaction has commercial substance. b) Prepare the entries on both companies' books assuming that the transaction lacks commercial substance.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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