Financial Accounting
14th Edition
ISBN: 9781305088436
Author: Carl Warren, Jim Reeve, Jonathan Duchac
Publisher: Cengage Learning
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Question
Chapter 10, Problem 25E
a.
To determine
Determine the amount of cash given.
b.
To determine
Determine the gain or (loss) on the exchange of equipment.
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Asset Traded for Similar Asset
A printing press priced at a fair market value of $606,400 is acquired in a transaction that has commercial substance by trading in a similar press and paying cash for the
difference between the trade-in allowance and the price of the new press.
a. Assuming that the trade-in allowance is $266,800, what is the amount of cash given?
$
b. Assuming that the book value of the press traded in is $240,100, what is the gain or loss on the exchange?
1.
Our Company trades in old equipment that cost $81,000, has a book value of $53,000 and a fair value of $45,000.
The new equipment has a list price of $94,000.
We receive a trade in allowance for the old equipment of $50,000.
This transaction has commercial substance.
Prepare the journal entry to record this exchange.
Answer:
Debits
Credits
Yin Co traded in an old machine having a carrying amount of P16,800, and paid a cash difference of P6,000 for a new machine having a total cash price of P20,500. What amount of loss should Yin Co. recognized on this exchange?
Chapter 10 Solutions
Financial Accounting
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