Textile manufacturer Peterson Corp. exchanges computer software having a carrying amount of $11,000 with the real estate company Frederick Corp.
Textile manufacturer Peterson Corp. exchanges computer software having a carrying amount of $11,000 with the real estate company Frederick Corp. The software that is received in exchange from Frederick Corp. has a carrying amount of $15,100, performs different functions, and has a fair value of $20,800. Both companies are 100% owned by the same individual and since they are closely held companies they both follow ASPE. Discuss how this transaction should be measured and prepare the journal entries for both companies to record the exchange. Use the decision tree in Illustration 23-5 to explain the reasoning for your answer.
This is a related party transaction since the same individual owns the two companies Since the trans…View the full answer
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