Question: During the current year, Bridgeport Construction Ltd. traded in two relatively new small cranes (cranes no. 6RT and S79) for a larger crane that Bridgeport
During the current year, Bridgeport Construction Ltd. traded in two relatively new small cranes (cranes no. 6RT and S79) for a larger crane that Bridgeport expects will be more useful for the particular contracts that the company has to fulfill over the next couple of years. The new crane is acquired from Sarasota Manufacturing Inc., which has agreed to take the smaller equipment as trade-ins and also pay $13,000 cash to Bridgeport. The new crane cost Sarasota $173,000 to manufacture and is classified as inventory. The following information is available:
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----------------------------------------------------------------------------------Bridgeport Const.----------------------------------------------------Sarasota Mfg | ||||||||||||
| Cost of crane #6RT | $122,000 | |||||||||||
| Cost of crane #S79 | 117,500 | |||||||||||
| Accumulated depreciation, #6RT | 12,000 | |||||||||||
| Accumulated depreciation, #S79 | 15,000 | |||||||||||
| Fair value, #6RT | 125,000 | |||||||||||
| Fair value, #S79 | 86,000 | |||||||||||
| Fair value of new crane | $198,000 | |||||||||||
| Cash paid | 13,000 | |||||||||||
| Cash received
Assume that this exchange has commercial substance. Prepare the journal entries on the books of (1) Bridgeport Construction Ltd. and (2) Sarasota Manufacturing Inc. Sarasota uses a perpetual inventory system. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Bridgeport Construction
---------------------------------- ----------------------------------- ---------------------------------- -------------------------------- -------------------------------- ------------------------------ -------------------------------
Sarasota Manufacturing
_______________________ _________________________ _________________________- (To record equipment purchase)
_________________________ _________________________ (To record the cost)
Assume that this exchange lacks commercial substance. Prepare the journal entries on the books of (1) Bridgeport Construction and (2) Sarasota Manufacturing. Sarasota uses a perpetual inventory system. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Bridgeport Construction
_________________________ __________________________ ___________________________ ________________________- __________________________ ___________________________ ___________________________
Sarasota Manufacturing
______________________ _______________________ ________________________
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