Question 1

Holyfield Corporation wishes to exchange a machine used in its operations. Holyfield has received the following offers from other companies in the industry. For each of the three independent situations, prepare the journal entries to record the exchange on the books of each company.

Holyfield Dorsett Winston Liston Machine cost (#) 160,000(A) $122,000(B) $152,000(C) $160,000(D) Accum. depreciation 60,000 45,000 70,000 75,000 Fair value 92,000 69,000 90,000 95,000

(a). Dorsett Company offered to exchange a similar machine plus $22,000. (The exchange has commercial substance for both parties.)

Holyfield Corporation

Dorsett Company

(b). Winston Company offered to exchange a similar machine. (The exchange lacks commercial substance for both parties.)

Holyfield Corporation

Winston Company

(c). Liston Company offered to exchange a similar machine, but wanted $2,800 in addition to Holyfield's machine. (The exchange has commercial substance for both parties.)

Holyfield Corporation

Liston Company