(Nonmonetary Exchange) Stacey Limited exchanged equipment that it uses in its manufacturing operations for similar equipment that...
Question:
(Nonmonetary Exchange) Stacey Limited exchanged equipment that it uses in its manufacturing operations for similar equipment that is used in the operations of Chokar Limited. Stacey also paid Chokar $3,000 in cash. The following information pertains to the exchange: Stacey Chokar Equipment (cost) $50,000 $55,000 Accumulated depreciation 31,250 22,000 Fair value of equipment 25,000 28,000 Instructions
a. Prepare the journal entries to record the exchange on the books of both companies, assuming the exchange is determined to have commercial substance.
b. Repeat part (a), assuming the exchange is determined not to have commercial substance.
c. List some of the factors that the accountant would need to consider in order to determine whether the transaction has commercial substance.
Expert Answer:
A B C For a business substance to exist there should be three focuses is to be checked ie reg... View the full answer
