FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Transcribed Image Text:Zara corporation decided to exchange its old machine that costs $100,000 with
a new one. On January 1, 2020, the company exchanged the old machine for a
new one paying $15,000 cash and giving the old machine. On the date of
exchange the old machine had an accumulated depreciation of $60,000 and fair
value of $80,000. As a result of the exchange the company recognized: *
O Gain $40,000
Gain $20,000
O Loss $45,000
O Loss $65,000
No gain or Lss
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- In December 2005, SHOWEE Company exchanged an old machine, with a cost P6,000,000 and 50% depreciated, for a dissimilar used machine and paid a cash difference of P1,500,000. The fair value of the old machine was determined to be P2,000,000. SHOWEE should record the machine at 6,000,000 3,500,000 3,000,000 2,000,000arrow_forwardOn 1 July 2022, your company acquired a machine for $103,000 on credit and decided to depreciate it for 25 years with no residual amount. The credit was taken from a local bank that charges 4.2% per annum with payments every year on 30 June. Assume that the fair values of this asset were: Date Fair Value 1/7/2023 $105,000 30/11/2023 $98,000 30/6/2024 $80,000 a. Using the cost model, prepare the relevant journal entries from the date of acquisition to 30 June 2023 b.Using the revaluation model, prepare the relevant journal entries from the date of acquisition to 30 June 2023.arrow_forwardPensacola Inc. purchased equipment on January 1, 2016 for $135,000. Ater 3 years Pensacola exchanged the equipment for a truck from Mam, Inc in a non-monetary exchange. The balance in the Accumulated Depreciation account at the time of the exchange was $75,000. Assume the exchange lacks commercial substance. At the time of the exchange, the fair value of the equipment was $77 000 and the fair vallue of the truck was $57,000. Miami paid 520,000 cashtoot to Pensacola What is the cost basis of the truck acquired by Pensacola? O $44,415 $52,585 $57,000 O $40,000 O None of the abovearrow_forward
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- 1. On November 4, 2020, GT Corporation sells a piece of its equipment. GT Corporation had initially purchased the equipment for $350,000. The company had recorded $230,000 in depreciation for this piece of equipment as of the date of sale. If GT Corporation receive $150,000 cash when they sell the equipment, they will report a November 2020 Income Statement; if they instead receive $100,000 cash when they sell the equipment, they will on their report a a. $150,000 gain; $100,000 gain. b. $80,000 gain; $130,000 loss. c. $30,000 loss; $20,000 gain. d. $30,000 gain; $20,000 loss.arrow_forwardRakesharrow_forwardif the exchange has commercial substance, what amount of gain is to be recognized?arrow_forward
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