EBK ADVANCED FINANCIAL ACCOUNTING
12th Edition
ISBN: 9781260165104
Author: Christensen
Publisher: YUZU
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Chapter 7, Problem 7.1.4E
To determine
Concept Introduction:
The intercompany transactions occur when the unit of legal entity is having transactions with another unit of the similar entity. This transaction can be divided into two categories such as direct and indirect intercompany transfer. The direct transfer occurs when there is transfer between the different units of the same entity and indirect transfer occurs when the unit of entity acquires debt or assets issued to unrelated entity through another unit of the same entity. This type of transfer will help the entity in improving the flow of finance and asset in efficient manner.
:
The amount of equipment and
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Required information
[The following information applies to the questions displayed below.]
Case A. Kapono Farms exchanged an old tractor for a newer model. The old tractor had a book value of $20,500
(original cost of $45,000 less accumulated depreciation of $24,500) and a fair value of $10,700. Kapono paid $37,000
cash to complete the exchange. The exchange has commercial substance.
Case B. Kapono Farms exchanged 100 acres of farmland for similar land. The farmland given had a book value of
$585,000 and a fair value of $870,000. Kapono paid $67,000 cash to complete the exchange. The exchange has
commercial substance.
5
Required:
1. What is the amount of gain or loss that Kapono would recognize on the exchange? What is the initial value of the new tractor?
2. Assume the fair value of the old tractor is $31,000 instead of $10,700. What is the amount of gain or loss that Kapono would
recognize on the exchange? What is the initial value of the new tractor?
Complete this question by…
!
Required information
[The following information applies to the questions displayed below.]
Case A. Kapono Farms exchanged an old tractor for a newer model. The old tractor had a book value of $14,500
(original cost of $33,000 less accumulated depreciation of $18,500) and a fair value of $9,500. Kapono paid
$25,000 cash to complete the exchange. The exchange has commercial substance.
Case B. Kapono Farms exchanged 100 acres of farmland for similar land. The farmland given had a book value of
$525,000 and a fair value of $750,000. Kapono paid $55,000 cash to complete the exchange. The exchange has
commercial substance.
Required:
1.What is the amount of gain or loss that Kapono would recognize on the exchange of the tractor?
2. Assume the fair value of the old tractor is $19,000 instead of $9,50O. What is the amount of gain or loss that Kapono would
recognize on the exchange? What is the initial value of the new tractor?
1. Denver, Inc., exchanged land and cash of $8,000 for equipment. The land was purchased at $55,000 a few years ago and a fair value of $60,000.
Prepare the journal entry to record the exchange. Assume the exchange has no commercial substance.
2. Metro Inc. trades its used machine for a new model at Denver Inc. The used machine has a book value of $8,000 (original cost of $12,000) and a fair value of $4,000. The new model lists for $15,000. Denver gives Metro a trade-in allowance of $7,000 for the used machine, $3,000 more than its fair value.
Prepare a journal entry for Metro, assuming commercial substance.
Chapter 7 Solutions
EBK ADVANCED FINANCIAL ACCOUNTING
Ch. 7 - Prob. 7.1QCh. 7 - Prob. 7.2QCh. 7 - Prob. 7.3QCh. 7 - Prob. 7.4QCh. 7 - Prob. 7.5QCh. 7 - Prob. 7.6QCh. 7 - Prob. 7.7QCh. 7 - Prob. 7.8QCh. 7 - Prob. 7.9QCh. 7 - Prob. 7.10Q
Ch. 7 - Prob. 7.11QCh. 7 - Prob. 7.12QCh. 7 - Prob. 7.13QCh. 7 - Prob. 7.14QCh. 7 - Prob. 7.15QCh. 7 - Prob. 7.16QCh. 7 - Prob. 7.17QCh. 7 - Prob. 7.18AQCh. 7 - Prob. 7.1CCh. 7 - Prob. 7.2CCh. 7 - Prob. 7.3CCh. 7 - Prob. 7.4CCh. 7 - Prob. 7.5CCh. 7 - Prob. 7.1.1ECh. 7 - Prob. 7.1.2ECh. 7 - Prob. 7.1.3ECh. 7 - Prob. 7.1.4ECh. 7 - Prob. 7.1.5ECh. 7 - Prob. 7.2.1ECh. 7 - Prob. 7.2.2ECh. 7 - Prob. 7.2.3ECh. 7 - Prob. 7.2.4ECh. 7 - Prob. 7.2.5ECh. 7 - Prob. 7.2.6ECh. 7 - Prob. 7.3ECh. 7 - Prob. 7.4ECh. 7 - Prob. 7.5ECh. 7 - Prob. 7.6ECh. 7 - Prob. 7.7ECh. 7 - Transfer of Depreciable Asset at Year-End Pitcher...Ch. 7 - Prob. 7.9ECh. 7 - Sale of Equipment to Subsidiary in Current Period...Ch. 7 - Prob. 7.11ECh. 7 - Prob. 7.12ECh. 7 - Prob. 7.13ECh. 7 - Prob. 7.14ECh. 7 - Prob. 7.15ECh. 7 - Prob. 7.16ECh. 7 - Prob. 7.17ECh. 7 - Prob. 7.18ECh. 7 - Prob. 7.19ECh. 7 - Prob. 7.20ECh. 7 - Prob. 7.21ECh. 7 - Prob. 7.22ECh. 7 - Prob. 7.23AECh. 7 - Prob. 7.24PCh. 7 - Prob. 7.25PCh. 7 - Prob. 7.26PCh. 7 - Prob. 7.27PCh. 7 - Prob. 7.28.1PCh. 7 - Prob. 7.28.2PCh. 7 - Prob. 7.28.3PCh. 7 - Prob. 7.28.4PCh. 7 - Prob. 7.29PCh. 7 - Prob. 7.30PCh. 7 - Prob. 7.31PCh. 7 - Prob. 7.32PCh. 7 - Prob. 7.33PCh. 7 - Prob. 7.34PCh. 7 - Prob. 7.35PCh. 7 - Prob. 7.37PCh. 7 - Prob. 7.38PCh. 7 - Prob. 7.41AP
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