During the current year, Marshall Construction trades an old crane that has a book value of €90,000 (original cost €140,000 less accumulated depreciation €50,000) for a new crane from Brigham Manufacturing Co. The new crane cost Brigham €165,000 to manufacture and is classified as inventory. The following information is also available.

Instructions

(a) Assuming that this exchange is considered to have commercial substance, prepare the journal entries on the books of (1) Marshall Construction and (2) Brigham Manufacturing.

(b) Assuming that this exchange lacks commercial substance for Marshall, prepare the journal entries on the books of Marshall Construction.

(c) Assuming the same facts as those in (a) except that the fair value of the old crane is €98,000 and the cash paid is €102,000, prepare the journal entries on the books of (1) Marshall Construction and (2) Brigham Manufacturing.

(d) Assuming the same facts as those in (b) except that the fair value of the old crane is €97,000 and the cash paid €103,000, prepare the journal entries on the books of (1) Marshall Construction and (2) Brigham Manufacturing.

Transcribed Image Text:

Fair value of old crane Fair value of new crane Cash paid Cash received Marshall Const. 82,000 Brigham Mfg. Co. 200,000 118,000 118,000