Question
The following transactions occurred in fiscal 2021: Transaction 1: Synthesize Inc. exchanged machinery with Energize Corp. Synthesize's machinery Energize's machinery Cost 500,000 620,000 Accumulated depreciation
The following transactions occurred in fiscal 2021:
Transaction 1: Synthesize Inc. exchanged machinery with Energize Corp.
| Synthesize's machinery | Energize's machinery |
Cost | 500,000 | 620,000 |
Accumulated depreciation | 200,000 | 500,000 |
Fair value | 350,000 | Not known |
Transaction 2: Synthesize Inc. purchased equipment by signing a 5 year non-interest bearing note payable for $200,000. The implicit rate of interest was 5%.
Transaction 3: Synthesize received a government grant of $10,000 to help purchase the equipment.
Required:
- Assuming the machinery exchange has commercial substance, prepare the required journal entries for the exchange for Energize.
- Assuming the machinery exchange does NOT have commercial substance, prepare the required journal entries for the exchange for Synthesize.
- Prepare the required journal entry to record the purchase of the equipment purchased by the noninterest bearing note.
- Prepare the required journal entries to record the government grant using both the gross method and the net method.
This is all the information in assignment .
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