3. Santana Company exchanged equipment used in its manufacturing operations plus $2,000 in cash for similar equipment
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3. Santana Company exchanged equipment used in its manufacturing operations plus $2,000 in cash for similar equipment used in the operations of Delaware Company. The following 75 information pertains to the exchange. 76 77 78 79 80 81 82 Instructions: 83 84 85 86 87 88 89 90 91 92 Equipment (cost) Accumulated depreciation Fair value of equipment Cash given up [2] [1] Calculate the gain or loss on exchange for each of the two companies. Santana Dr. Fair value of equipment received Cash received / paid Less: Book value of equipment ($28,000-19,000) ($28,000-10,000) Gain or (Loss) on Exchange 93 94 Case 1: 95 Santana: 96 97 98 99 100 101 102 103 Cr. Santana $28,000 19,000 13,500 2,000 Accounts $15,500 (2,000) (9,000) Amount 4,500 Delaware $28,000 10,000 15,500 Delaware $13,500 2,000 Prepare the journal entries to record the exchange on the books of both companies in each of the following cases. The exchange has commercial substance. (18,000) (2,500)
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