The production manager of Marigold Corporation wants to acquire a different brand of machine by exchanging the machine that it currently uses in operations for the brand of equipment that others in the industry are using. The brand being used by other companies is more comfortable for the operators because it has different attachments that allow the operators to adjust the controls for a variety of arm and hand positions. The production manager has received the following offers from other companies:

1.		Secord Corp. offered to give Marigold a similar machine plus $9,890 in exchange for Marigold’s machine.
2.		Bateman Corp. offered a straight exchange for a similar machine with essentially the same value in use.
3.		Shripad Corp. offered to exchange a similar machine with the same value in use, but wanted $3,440 cash in addition to Marigold’s machine.
4.		The production manager has also contacted Ansong Corporation, a dealer in machines. To obtain a new machine from Ansong, Marigold would have to pay $39,990 and also trade in its old machine.

Marigold’s machinery has a cost of $68,800, a net book value of $47,300, and a fair value of $39,560. The following table shows the information needed to record the machine exchange between the companies:

	Second	Batman	Shrip	Ansong
Machine cost	$51,600	$63,210	$68,800	$55,900
Accumulated depreciation—machinery	19,350	30,530	32,250	-0-
Fair value	29,670	39,560	43,000	79,550

For each of the four independent situations, assume that Marigold accepts the offer. Prepare the journal entries to record the exchange on the books of each company. Assume that transactions 2 and 3 lack commercial substance for Bateman Company and Shripad Company respectively.

Here are the list of accounts:

Accounts Payable
Accounts Receivable
Accumulated Depreciation - Buildings
Accumulated Depreciation - Equipment
Accumulated Depreciation - Leasehold Improvements
Accumulated Depreciation - Machinery
Accumulated Depreciation - Trucks
Advertising Expense
Asset Retirement Obligation
Buildings
Cash
Common Shares
Contributed Surplus
Cost of Goods Sold
Deferred Revenue - Government Grants
Depreciation Expense
Donation Revenue
Equipment
Finance Expense
Finance Revenue
Gain in Value of Investment Property
Gain on Disposal of Building
Gain on Disposal of Equipment
Gain on Disposal of Machinery
Gain on Disposal of Truck
Gain on Sale of Land
GST Payable
GST Receivable
Interest Expense
Interest Income
Interest Payable
Interest Receivable
Inventory
Investment Property
Land
Land Improvements
Loss in Value of Investment Property
Loss on Disposal of Building
Loss on Disposal of Equipment
Loss on Disposal of Land
Loss on Disposal of Machinery
Loss on Disposal of Truck
Machinery
Maintenance and Repairs Expense
Mineral Resources
Mortgage Payable
No Entry
Notes Payable
Notes Receivable
Office Expense
Owner's Drawings
Prepaid Expenses
Prepaid Insurance
Profit on Construction
Purchase Discounts
Purchase Returns and Allowances
Rent Expense
Revaluation Gain or Loss
Revaluation Surplus (OCI)
Revenue - Government Grants
Salaries and Wages Expense
Salaries and Wages Payable
Sales Revenue
Service Revenue
Supplies
Supplies Expense
Tenant Deposits Liability
Trucks
 

Transaction 1: Margold Corporation Account Titles and Explanation Debit Credit Second Corporation Account Titles and Explanation Debit Credit