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Machinery with a fair value of $63,000 is acquired in a non-cash exchange. Below are five independent assumptions (a) to (e) as to the consideration
Machinery with a fair value of $63,000 is acquired in a non-cash exchange. Below are five independent assumptions (a) to (e) as to the consideration given in the exchange:
- A non-interest-bearing note for $72,450 maturing in one year. Notes of similar risk required 15% interest at the date of the exchange.
- Cash of $23,000 plus a payment of $46,000 after 12 months. The market interest rate is 15%.
- Land with a book value of $37,000 and a market value of $64,000.
- A similar kind of used machinery with a net book value of $36,700 and a fair value of $45,800, plus cash of $16,800. When new, the used machinery cost $56,400. There will be no change in cash flows from operating activities as the result of this exchange.
- Inventory carried at $42,750 on the most recent balance sheet as part of a perpetual inventory carried at LCM. Cash flows are different as a result.
Give the journal entry required for each of the above independent assumptions.
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