#10.9 Metlock Ltd. traded a used truck (cost $31,300, accumulated depreciation $28,170, fair value $1,030) for a new truck. Metlock did look up the value of its used truck and determined its fair value at the date of the trade is $1,030. The list price of the new truck is $36,580 and the trade-in allowance given on the trade was $4,160.

If Metlock paid $32,420, what should be the amount used as the cost of the new truck?

The cost of the new truck = ???

Prepare entries to record the cash that was exchanged in each of the transactions, assuming the cost reduction method is used.

Account Titles and Explanation Debit Credit

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??? ??? ???

??? ??? ???

??? ??? ???

??? ??? ???

#10.10

In early January, Sage Hill Corp. purchased land as a building site to house its manufacturing operations in Moose Jaw for $460,700. The municipality donated $162,000 to Sage Hill as an incentive to locate in the area and acquire the land.

Prepare entries to record the cash that was exchanged in each of the transactions, assuming the cost reduction method is used.

Account Titles and Explanation Debit Credit

??? ??? ???

??? ??? ???

(To record the purchase of land)

??? ??? ???

??? ??? ???

(To record collection of the grant received)

#10.11 Larkspur Inc. received equipment as a donation. The equipment has a fair value of $52,000.

Prepare the journal entry to record the receipt of the equipment if the equipment was donated by a shareholder.

Account Titles and Explanation Debit Credit

??? ??? ???

??? ??? ???

#10.12 Identify whether the following costs should be treated as a capital expenditure or a revenue expenditure when they are incurred.

A) $13,000 paid to rearrange and reinstall machinery ???

B) $400 paid for a tune-up and oil change on a delivery truck ???

C) $200,000 paid for an addition to a building ???

D) $7,000 paid to replace a wooden floor with a concrete floor ???

E) $4,000 paid for a major overhaul that extends the useful life of a truck ???

F) $700,000 paid for relocating company headquarters ???

G) $6,000 to replace 18 tires on a trailer ???