Question
During the current year, Flint Construction Ltd. traded in two relatively new small cranes (cranes no. 6RT and S79) for a larger crane that Flint
During the current year, Flint Construction Ltd. traded in two relatively new small cranes (cranes no. 6RT and S79) for a larger crane that Flint expects will be more useful for the particular contracts that the company has to fulfill over the next couple of years. The new crane is acquired from Pina Colada Manufacturing Inc., which has agreed to take the smaller equipment as trade-ins and also pay $ 17,000 cash to Flint. The new crane cost Pina Colada $ 167,500 to manufacture and is classified as inventory. The following information is available:
Flint | Pina Colada | |||
Cost of crane #6RT | $ 128,000 | |||
Cost of crane #S79 | 111,000 | |||
Accumulated depreciation, #6RT | 12,000 | |||
Accumulated depreciation, #S79 | 15,000 | |||
Fair value, #6RT | 126,000 | |||
Fair value, #S79 | 84,500 | |||
Fair value of new crane | $ 193,500 | |||
Cash paid | 17,000 | |||
Cash received | 17,000 |
Assume that this exchange has commercial substance. Prepare the journal entries on the books of (1) Flint Construction and (2) Pina Colada Manufacturing. Pina Colada uses a perpetual inventory system. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
During the current year, Flint Construction Ltd. traded in two relatively new small cranes (cranes no. 6RT and S79) for a larger crane that Flint expects will be more useful for the particular contracts that the company has to fulfill over the next couple of years. The new crane is acquired from Pina Colada Manufacturing Inc., which has agreed to take the smaller equipment as trade-ins and also pay $ 17,000 cash to Flint. The new crane cost Pina Colada $ 167,500 to manufacture and is classified as inventory. The following information is available:
Flint | Pina Colada | |||
Cost of crane #6RT | $ 128,000 | |||
Cost of crane #S79 | 111,000 | |||
Accumulated depreciation, #6RT | 12,000 | |||
Accumulated depreciation, #S79 | 15,000 | |||
Fair value, #6RT | 126,000 | |||
Fair value, #S79 | 84,500 | |||
Fair value of new crane | $ 193,500 | |||
Cash paid | 17,000 | |||
Cash received | 17,000 |
A) Assume that this exchange has commercial substance. Prepare the journal entries on the books of (1) Flint Construction and (2) Pina Colada Manufacturing. Pina Colada uses a perpetual inventory system. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
B) Assume that this exchange lacks commercial substance. Prepare the journal entries on the books of (1) Flint Construction and (2) Pina Colada Manufacturing. Pina Colada uses a perpetual inventory system. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
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