9b Flashcards
What type of exchange non monetary exchange transactions generally results in the recognition of gains or losses?
Exchange of assets with a change in the future cash flows as a result of the transaction
Dodson company traded in a manual pressing machine for an automated pressing machine and gave $40,000 cash. The old machine cost $465,000 and had a net book value of $355,000. The old machine had a fair value of $300,000. What is the correct journal entry to record exchange assuming commercial substance?
Debit: equipment 340,000; loss on disposal 55,000; accumulated depreciation 110,000.
Credit: equipment 465,000; cash 40,000. 
Glen Inc. and Armstrong co. have an exchange with no commercial substance. The asset given up by Glen Inc. has a book value of $72,000 in a fair value of $90,000. The asset given up by Armstrong Coco has a book value of $120,000 in the fair value of $114,000. Boot of $24,000 is received by Armstrong Co. What amount should Glenn record for the asset received?
$96,000
Jamison company purchase the assets of Booker company and an auction for $5,600,000. An independent appraisal of the fair value of their assets is listed below:
Land $1,900,000
building $2,800,000
equipment $2,100,000
trucks $3,400,000
Assuming that specific identification costs are impracticable And that Jamison allocate the purchase price on the basis of the relative fair values, what amount would be allocated to the trucks?
$1,866,667
Seigle company exchanged 3000 shares of Guin company common stock, which Seagal was holding as an investment, for equipment from Mayo company. The Guin company common stock, which had been purchased by sequel for $50 per share, had a quoted market value of $58 per share at the date of exchange. The equipment had a recorded amount on Mayo’s books of $157,500. What journal entry should Seagal make to record this exchange?
Debit equipment 174,000
Credit investment on Guin Co common stock 150,000; gain on disposal of investment 24,000
On March 1, 2025 sprightly dog treat company purchased a new conveyor component to be attached to its dog bone production line. The cost of this component was $120,000. Sparkly also incurred $17,000 of installation cost and $15,000 of cost to rearrange the production line. By adding this component sprightly estimates that the production of a dog bones will increase by 30%, although the life of the production line was not extended. What amount of these costs should be capitalized?
$152,000
Horner company buys delivery van with a list price of $70,000. The dealer grants a 15% reduction in list price in and additional 2% cash discount on the net price if payment is made in 30 days. Sales taxes amount to $930 and the company paid an extra $700 to you have a special device to installed. What cost would be recorded for the van?
$59,940
Harden company received $120,000 in cash and a used computer with a fair value of $360,000 from page corporation for hardens companies existing computer having a fair value of $480,000 in an undepreciated cost of $450,000 recorded on its books. The transaction has no commercial substance. How much gains should Harvey didn’t recognize on the on this exchange, and at what amount should the acquired computer be recorded, respectively?
$30,000 and $360,000
On August 1, 2025, Hayes corporation purchased a new machine on a deferred payment basis. A down payment of $18,000 was made and four annual installments of $15,000 each are to be made beginning on September 1, 2026. Hayes cost of capital is 7%. The present value of an ordinary annuity factor for four years at 7% is 3.38721. The present value of an ordinary annuity for four years at 7% is 0.76290. Hayes incurred and paid installment cost amounting to $3000. The amount to be capitalized as the cost of the machine is
$71,808
Baker ink and Fisher co have an exchange with commercial substance. The asset given up by baker has a book value of $72,000 in a fair value of $90,000. The asset given up by fisher has a book value of $120,000 in the fair value of $114,000. Boot of $24,000 is received by fisher. What amount should fisher record for the asset received?
$90,000
Storm corporation purchased a new machine on October 31, 2025. A $4800 down payment was made in three monthly installments of $14,400 beginning on November 30, 2025. The cash price would have been $46,400. Storm paid no installation Charges under the monthly payment plan but an $800 installation charge would have been incurred with the cash purchase. The amount capitalized as the cost of the machine on October 31, 2025 is
$47,200
At the beginning of the 2025 fiscal year, and inexperienced maintenance technician at Rex company did not check the oil in one of the company cars and the engine burned up. Rex replaced the engine for $7000. The material expenditure is expected to extend the useful life of the car by three years. The car had an original cost of $45,000 and a four year life. The balance in accumulated depreciation at the time of the expenditure was $7500. The entry to record the purchase would include a
Debit to accumulated depreciation of $7000
On December 1, miser corporation exchanged 6000 shares of its $25 par value common stock held in treasury for a parcel of land to be held for a future plant site. The treasury shares were acquired by miser for $40 per share, and on the exchange date the common shares of miser had a fair value of $50 per share. Miser received $18,000 for selling scrap when an existing building on the property was removed from the site. Based on these facts, the land should be capitalized at
$282,000
