Accounting Practice Problems

Problem 1 {12 Elli.) Colton Corporation has a machine (X) that cost $120,000, has a book value of $25,000 and fair market value of $63,000. Colton exchanged the machine plus $12,000 for another machine [Y] from Newton (10.. The newly acquired machine is carried in Newton's books at its cost of $90,000 with accumulate depreciation of $20,000. Required: A. Prepare the journal entry to record the exchange in the hooks of Colton Corporation assuming that exchange has commercial substance. B. Prepare the journal entry to record the exchange in the hooks of Newton Co. assuming that exchange lacks commercial substance. Problem 2 {16 23.5.} Synthetic Fuels Corporation prepares its nancial statements according to m. On June 30', 2019, the company purchased equipment for $540,000. The equipment is expected to have a veyear useful life with no residual value. Synthetic uses the straightline depreciation method for all depreciahle assets and chooses to revalue the equipment. Fair value of the equipment was $524,330 at 125112019 and $354,343 at 1253132020, respectively. Required: 1. Calculate the depreciation for 2019 and prepare the journal entry to record it. 2. Prepare the journal entry to record the revaluation of the equipment at 1231:2019 (Show supporting calculations). 3. Calculate the depreciation for 2020 and prepare the journal entry to record it. 4. Prepare the journal entry to record the revaluation of the equipment at 12313020 (Show supporting calculations)