Entries for trade of fixed asset On July 1, Twin Pines Co., a water distiller, acquired...

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Entries for trade of fixed asset On July 1, Twin Pines Co., a water distiller, acquired new bottling equipment with a list price (fair market value) of $220,000. Twin Pines received a trade-in allowance (fair market value) of $45,000 on the old equipment of a similar type and paid cash of $175,000. The following information about th old equipment is obtained from the account in the equipment ledger: cost, $180,000; accumulated depreciation on December 31, the end of the preceding fiscal year, $120,000; annual depreciation, $12,000. Assume the exchange has commercial substance. a. Journalize the entry to record the current depreciation of the old equipment to the date of trade-in. If an amount box does not require an entry, leave it blank. Depreciation Expense-Equipment Accumulated Depreciation-Equipment 6,000 6,000 Feedback Check My Work Remember that the amount given for the depreciation on the fixed asset is the annual amount. b. Journalize the entry to record the exchange transaction on July 1. If an amount box does not require an entry, leave it blank. Cash X Equipment (new) 220,000 X 12,000 X Gain on Exchange of Equipment 175,000 X Equipment (old) 45,000 X Incorrect 180,000 X Accumulated Depreciation-Equipment Feedback Check My Work The difference between the price of the new asset and the cash paid and the book value of the old asset determines the gain or loss. Feedback Check My Work Partially correct Entries for trade of fixed asset On July 1, Twin Pines Co., a water distiller, acquired new bottling equipment with a list price (fair market value) of $220,000. Twin Pines received a trade-in allowance (fair market value) of $45,000 on the old equipment of a similar type and paid cash of $175,000. The following information about th old equipment is obtained from the account in the equipment ledger: cost, $180,000; accumulated depreciation on December 31, the end of the preceding fiscal year, $120,000; annual depreciation, $12,000. Assume the exchange has commercial substance. a. Journalize the entry to record the current depreciation of the old equipment to the date of trade-in. If an amount box does not require an entry, leave it blank. Depreciation Expense-Equipment Accumulated Depreciation-Equipment 6,000 6,000 Feedback Check My Work Remember that the amount given for the depreciation on the fixed asset is the annual amount. b. Journalize the entry to record the exchange transaction on July 1. If an amount box does not require an entry, leave it blank. Cash X Equipment (new) 220,000 X 12,000 X Gain on Exchange of Equipment 175,000 X Equipment (old) 45,000 X Incorrect 180,000 X Accumulated Depreciation-Equipment Feedback Check My Work The difference between the price of the new asset and the cash paid and the book value of the old asset determines the gain or loss. Feedback Check My Work Partially correct