Question
On April 30, Roberts Company exchanged productive assets with Marilyn Corp. The following information relates to two of these exchanges. EXCHANGE A: Roberts Marilyn Asset
On April 30, Roberts Company exchanged productive assets with Marilyn Corp. The following information relates to two of these exchanges.
EXCHANGE A:
Roberts Marilyn
Asset given up truck computer
Cost $21,000 $18,000
Accumulated Depreciation 5,000 5,000
Fair market value 15,000 14,000
In addition, Marilyn will give Roberts $1,000. Both companies have determined that this transaction HAS commercial substance.
Requirement 1: Provide the journal entry for Marilyn in Exchange A.
EXCHANGE B:
Roberts Marilyn
Asset given up truck computer
Cost $38,000 $70,000
Accumulated Depreciation 6,000 4,000
Fair market value 52,000 60,000
In addition, Roberts will give Marilyn $8,000. Both companies have determined that this transaction LACKS commercial substance.
Requirement 2: Provide the journal entry for Roberts in Exchange B.
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