Question E10.18

Prepare the journal entry(ies) necessary to record this exchange, assuming that the exchange (a) has commercial substance, and (b) lacks commercial substance. Montgomery's year ends on December 31, and depreciation has been recorded through December 31,2019.

Instructions Record the acquisition of each of these assets. Interest expense I $10.17 (LO3) (Non-Monetary Exchange) Alatorre SpA, which manufactures shoes, hired a ro college graduate to work in its accounting department. On the first day of work, the accountant wasent signed to total a batch of invoices with the use of an adding machine. Before long, the accountant, was utau never before seen such a machine, managed to break the machine. Alatorre gave the machine gil 320 to Mills Business Machine AG (dealer) in exchange for a new machine. Assume the followills information about the machines. Alatorre SpA Mills AG (Old Machine) (New Machine) E270 Machine cost E290 0- Accumulated depreciation 140 405 Fair value 85 Instructions for each company, prepare the necessary journal entry to record the exchange. (The exchange has com- mercial substance.) E10.18 (LO3) (Non-Monetary Exchange) Montgomery Lid. purchased an electric wax melter on April 30, 2020, by trading in its old gas model and paying the balance in cash. The following data relate to the purchase. List price of new melter E15,800 Cash paid 10,000 Cost of old melter (5-year life, $700 residual value) 12,700 Accumulated depreciation (old melter-straight-line) 7,200 Fair value of old melter 5,200 Instructions Prepare the journal entry(ies) necessary to record this exchange, assuming that the exchange (a) has commercial substance, and (b) lacks commercial substance. Montgomery's year ends on December 31, and depreciation has been recorded through December 31, 2019. E10.19 (LO3) (Non-Monetary Exchange) Santana SA exchanged equipment used in its manufacture ing operations plus R$2,000 in cash for similar equipment used in the operations of Delaware Co. The following information pertains to the exchange Santana SA Equipment (cost) Delaware Co Accumulated depreciation R$28,000 Fair value of equipment 19,000 R$28,000 10,000 Cash given up 13,500 2,000 15,500