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On August 31, 2021, Thunder Bay Limited agreed to an exchange of equipment with another company. Other information regarding the exchange follows: Cost of the
On August 31, 2021, Thunder Bay Limited agreed to an exchange of equipment with another company. Other information regarding the exchange follows: Cost of the equipment given up by Thunder Bay Limited $ 200,390 Fair value of the equipment given up $ 114,830 Amount of cash received by Thunder Bay Limited in the course of the exchange $ 1,135 Fair value of the equipment received in the exchange $ 125,165 The equipment of which Thunder Bay is disposing was acquired on May 1, 2019. The following information was used by the company for the purpose of depreciating this equipment on a double-declining basis for the 2019, 2020, and 2021 years: Estimated residual value $ 37,503 Estimated useful life (in years) 5 Thunder Bay Limited has a year end of December 31, and calculates depreciation to the nearest full month. Required: 1. Calculate the accumulated depreciation on the equipment given up by Thunder Bay Limited on August 31, 2021. (6 marks) 2. Assuming the transaction has commercial substance, prepare the journal entry to record the exchange on the books of Thunder Bay Limited. (4 marks) 3. Assuming the transaction lacks commercial substance, prepare the journal entry to record the exchange on the books of Thunder Bay Limited. (2 marks)
| On August 31, 2021, Thunder Bay Limited agreed to an exchange of equipment with another company. Other information regarding the exchange follows: | |||||||
| Cost of the equipment given up by Thunder Bay Limited | $ 200,390 | ||||||
| Fair value of the equipment given up | $ 114,830 | ||||||
| Amount of cash received by Thunder Bay Limited in the course of the exchange | $ 1,135 | ||||||
| Fair value of the equipment received in the exchange | $ 125,165 | ||||||
| The equipment of which Thunder Bay is disposing was acquired on May 1, 2019. The following information was used by the company for the purpose of depreciating this equipment on a double-declining basis for the 2019, 2020, and 2021 years: | |||||||
| Estimated residual value | $ 37,503 | ||||||
| Estimated useful life (in years) | 5 | ||||||
| Thunder Bay Limited has a year end of December 31, and calculates depreciation to the nearest full month. | |||||||
| Required: | |||||||
| 1. | Calculate the accumulated depreciation on the equipment given up by Thunder Bay Limited on August 31, 2021. (6 marks) | ||||||
| 2. | Assuming the transaction has commercial substance, prepare the journal entry to record the exchange on the books of Thunder Bay Limited. (4 marks) | ||||||
| 3. | Assuming the transaction lacks commercial substance, prepare the journal entry to record the exchange on the books of Thunder Bay Limited. (2 marks) |
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Understanding Basic Statistics
Authors: Charles Henry Brase, Corrinne Pellillo Brase
6th Edition
978-1133525097, 1133525091, 1111827028, 978-1133110316, 1133110312, 978-1111827021
