Purchase Solution

AB company and XY company agree to exchange assets Gain/Loss

Not what you're looking for?

Ask Custom Question

Part 1
Equipment purchased on Jan, 1 2004 and installed Jan 15. Use began on Jan 30. The following amounts were expenditures related to the equipment ( all amounts are considered material).
Invoice price 100,000
Discount of 2% taken for paying within 10 days
Delivery charges 1,000
Set up costs 2,500
Repair of asset prior to installation 3,000
Costs of training employees to use equipment 5,000
Increase electricity and ventilation costs for equipment 4,000
Costs of repair of equipment,incurred on July 1st 6,000
Direct materials costs for a base built for equipment 5,400
Overhead costs for building base for equipment 3,600

Calculate total amount that should be considered acquisition cost of the equipment for depreciation purposes.

Part 2
AB company and XY company agree to exchange assets. see the following information:

AB Company-------------------- XY Company
Original cost 50,000--------------- 60,000
Accum. depr. 30,000 --------------- 40,000
Fair Market Value 24,000 ---------- 30,000

AB company agrees to pay 6,000 cash to XY company in the exchange.

Required:
1. assuming the assets are considered dissimilar assets, make the necessary journal entries to record the exchange for both parties.
2. Assuming the assets are considered similar assets, make the necessary journal entries to record the exchange for both parties.

Purchase this Solution

Solution Summary

A discussion is 341 words, showing journal entries and shows how the dissimilar and similar changes the outcomes.

Solution provided by:
Education
  • BSc, University of Virginia
  • MSc, University of Virginia
  • PhD, Georgia State University
Recent Feedback
  • "hey just wanted to know if you used 0% for the risk free rate and if you didn't if you could adjust it please and thank you "
  • "Thank, this is more clear to me now."
  • "Awesome job! "
  • "ty"
  • "Great Analysis, thank you so much"
Purchase this Solution


Free BrainMass Quizzes
Team Development Strategies

This quiz will assess your knowledge of team-building processes, learning styles, and leadership methods. Team development is essential to creating and maintaining high performing teams.

Introduction to Finance

This quiz test introductory finance topics.

Lean your Process

This quiz will help you understand the basic concepts of Lean.

Balance Sheet

The Fundamental Classified Balance Sheet. What to know to make it easy.

Employee Orientation

Test your knowledge of employee orientation with this fun and informative quiz. This quiz is meant for beginner and advanced students as well as professionals already working in the HR field.