Question
You have two clients that are considering trading machinery with each other. Although the machines are different from each other, you believe that an assessment
You have two clients that are considering trading machinery with each other. Although the machines are different from each other, you believe that an assessment of expected cash flows on the exchanged assets will indicate the exchange lacks commercial substance. Your clients would prefer that the exchange be deemed to have commercial substance, to allow them to record gains. Here are the facts:
Client A | Client B | |||||
Original cost | $109,900 | $158,600 | ||||
Accumulated depreciation | 43,200 | 84,600 | ||||
Fair value | 83,900 | 101,100 | ||||
Cash received (paid) | (17,200 | ) | 17,200 |
Correct answer iconYour answer is correct.
Record the trade-in on Client As books assuming the exchange has commercial substance. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)
Account Titles and Explanation | Debit | Credit |
eTextbook and Media
List of Accounts
Partially correct answer iconYour answer is partially correct.
Record the trade-in on Client As books assuming the exchange lacks commercial substance. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)
Account Titles and Explanation | Debit | Credit |
eTextbook and Media
Assistance Used
List of Accounts
Partially correct answer iconYour answer is partially correct.
Record the entry on Client Bs books assuming the exchange has commercial substance. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)
Account Titles and Explanation | Debit | Credit |
eTextbook and Media
List of Accounts
Partially correct answer iconYour answer is partially correct.
Record the entry on Client Bs books assuming the exchange lacks commercial substance. (Round intermediate calculations to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places e.g. 58,971. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)
Account Titles and Explanation | Debit | Credit |
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