Question
Mikeska Companies purchased equipment for $108,000 from Power-line Manufacturing on January 1, 2012. Mikeska paid $18,000 in cash and signed a five-year, 5% installment note
Mikeska Companies purchased equipment for $108,000 from Power-line Manufacturing on January 1, 2012. Mikeska paid $18,000 in cash and signed a five-year, 5% installment note for the remaining $90,000 of the purchase price. The note calls for annual payments of $18,000 plus interest on December 31 of each year. Mikeska made the first installment payment as scheduled, but was not able to make the installment due on December 31, 2013. On January 1, 2014, Power-line agreed to restructure the note receivable.
Required:
Provide journal entries in the books of both Mikeska Companies and Power-line Manufactur- ing for the period 20142016 under the following independent scenarios:USING IFRS ONLY
Power-line accepted $30,000 in cash and old equipment (fully depreciated on Mikeskas books) with a market value of $12,000 in exchange for the outstanding note.
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