On December 31, Year 1, JM Co. exchanged a used machine for a new machine from DP,
Question:
On December 31, Year 1, JM Co. exchanged a used machine for a new machine from DP, Inc. The used machine had a book value of $100,000 ($120,000 cost – $20,000 accumulated depreciation) and a fair value of $90,000. The new machine had a list price of $150,000, and DP gave JM a trade-in allowance of $105,000, with the difference paid in cash. The exchange has commercial substance. Question Amount
How much should JM record as the cost of the new machine in Year 1?
How much should JM record as a gain (loss), if any, in Year 1?
On December 1, Year 1, AB, Inc., exchanged a used truck for a new truck from LL Co. The used truck had a book value of $57,500 ($75,000 cost – $17,500 accumulated depreciation) and a fair value of $60,000. In addition to the exchange of the used truck, AB paid LL $8,000. The exchange has commercial substance.
How much should AB record as the cost of the new TRUCK in Year 1?
How much should AB record as a gain (loss), if any, in Year 1?
On July 1, Year 1, DDC Co. exchanged a used crane for a new crane with ZN Corp. The used crane had a book value of $120,000 ($225,000 cost – $105,000 accumulated depreciation) and a fair value of $125,000. The fair value of the new crane is $110,000. In addition to the exchange of the used crane, ZN paid DDC $15,000. The exchange lacks commercial substance.
How much should DDC record as a gain (loss), if any, in Year 1?
How much should DDC record as the cost of the new crane in Year 1?
Modern Advanced Accounting in Canada
ISBN: 978-1259087554
7th edition
Authors: Hilton Murray, Herauf Darrell