Question
Beck Company and Train Corporation exchange equipment. Relevant information are as follows: Beck Train Equipment 2,000,000 2,500,000 Accumulated depreciation 1,125,000 1,687,500 Fair value 750,000 1,000,000
Beck Company and Train Corporation exchange equipment. Relevant information are as follows:
Beck | Train | |
Equipment | 2,000,000 | 2,500,000 |
Accumulated depreciation | 1,125,000 | 1,687,500 |
Fair value | 750,000 | 1,000,000 |
Cash payment/(received) | 250,000 | (250,000) |
Beck Company also traded an old equipment with a dealer for a newer model. Relevant information are as follows: Old equipment: Cost P1,400,000 Accumulated depreciation 1,000,000 Fair value 350,000 Trade in value 500,000 New equipment: List price P2,000,000 Trade in value of old equipment (500,000) Cash payment P1,500,000 Required 1. Prepare journal entries related to the exchange using the following assumptions: a) Fair value approach b) Trade in value approach
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