Asked by Clayton Jarvis on May 31, 2024
Verified
Bell Company and Kene Company exchanged trucks on January 1 2017. Bell's truck cost $140000 had accumulated depreciation of $115000 and has a fair value of $15000. Kene's truck cost $105000 had accumulated depreciation of $90000 and has a fair value of $15000.
Instructions
(a) Journalize the exchange for Bell Company.
(b) Journalize the exchange for Kene Company.
Accumulated Depreciation
The cumulative depreciation expense recorded for a fixed asset from the time it was initially utilized.
Fair Value
An estimate of the market value of an asset or liability based on current conditions.
- Familiarize oneself with the operations of exchanging plant assets and the recognition of gains or losses.
Verified Answer
KS
Kriti SinghJun 05, 2024
Final Answer :
(a) Bell Company:
Cost $140,000 Less: Accumulated Depreciation 115,000 Book value 25,000 Fair value of old truck 15,000 Loss on disposal of plant assets $10,000\begin{array}{lr}\text { Cost } & \$ 140,000 \\\text { Less: Accumulated Depreciation } & 115,000 \\\text { Book value } & 25,000 \\\text { Fair value of old truck } & 15,000 \\\text { Loss on disposal of plant assets } & \$ 10,000 \\\end{array} Cost Less: Accumulated Depreciation Book value Fair value of old truck Loss on disposal of plant assets $140,000115,00025,00015,000$10,000
Equipment (new) 15,000 Accumulated Depreciation-Truck115,000 Loss on Disposal of Plant Assets.10,000 Equipment (old) 140,000\begin{array}{lrr} \text {Equipment (new) } &15,000\\ \text { Accumulated Depreciation-Truck} &115,000\\ \text { Loss on Disposal of Plant Assets.} &10,000\\ \text { Equipment (old) } &&140,000\\\end{array}Equipment (new) Accumulated Depreciation-Truck Loss on Disposal of Plant Assets. Equipment (old) 15,000115,00010,000140,000
(b)
Kene Company: Cost $105,000 Less: Accumulated Depreciation 90,000 Book value 15,000 Fair value of old truck 15,000 Gain (Loss) $10−\begin{array}{lr}\text {Kene Company:}\\\text { Cost } & \$ 105,000 \\\text { Less: Accumulated Depreciation } & 90,000 \\\text { Book value } & 15,000 \\\text { Fair value of old truck } & 15,000 \\\text { Gain (Loss) }& \$ 10- \\\end{array}Kene Company: Cost Less: Accumulated Depreciation Book value Fair value of old truck Gain (Loss) $105,00090,00015,00015,000$10−
Equipment (new) 15,000 Accumulated Depreciation-Equipment 90,000Equipment (old) 105,000\begin{array}{lrr} \text { Equipment (new) } &15,000\\ \text { Accumulated Depreciation-Equipment } &90,000\\ \text {Equipment (old) } &&105,000\end{array} Equipment (new) Accumulated Depreciation-Equipment Equipment (old) 15,00090,000105,000
Cost $140,000 Less: Accumulated Depreciation 115,000 Book value 25,000 Fair value of old truck 15,000 Loss on disposal of plant assets $10,000\begin{array}{lr}\text { Cost } & \$ 140,000 \\\text { Less: Accumulated Depreciation } & 115,000 \\\text { Book value } & 25,000 \\\text { Fair value of old truck } & 15,000 \\\text { Loss on disposal of plant assets } & \$ 10,000 \\\end{array} Cost Less: Accumulated Depreciation Book value Fair value of old truck Loss on disposal of plant assets $140,000115,00025,00015,000$10,000
Equipment (new) 15,000 Accumulated Depreciation-Truck115,000 Loss on Disposal of Plant Assets.10,000 Equipment (old) 140,000\begin{array}{lrr} \text {Equipment (new) } &15,000\\ \text { Accumulated Depreciation-Truck} &115,000\\ \text { Loss on Disposal of Plant Assets.} &10,000\\ \text { Equipment (old) } &&140,000\\\end{array}Equipment (new) Accumulated Depreciation-Truck Loss on Disposal of Plant Assets. Equipment (old) 15,000115,00010,000140,000
(b)
Kene Company: Cost $105,000 Less: Accumulated Depreciation 90,000 Book value 15,000 Fair value of old truck 15,000 Gain (Loss) $10−\begin{array}{lr}\text {Kene Company:}\\\text { Cost } & \$ 105,000 \\\text { Less: Accumulated Depreciation } & 90,000 \\\text { Book value } & 15,000 \\\text { Fair value of old truck } & 15,000 \\\text { Gain (Loss) }& \$ 10- \\\end{array}Kene Company: Cost Less: Accumulated Depreciation Book value Fair value of old truck Gain (Loss) $105,00090,00015,00015,000$10−
Equipment (new) 15,000 Accumulated Depreciation-Equipment 90,000Equipment (old) 105,000\begin{array}{lrr} \text { Equipment (new) } &15,000\\ \text { Accumulated Depreciation-Equipment } &90,000\\ \text {Equipment (old) } &&105,000\end{array} Equipment (new) Accumulated Depreciation-Equipment Equipment (old) 15,00090,000105,000
Learning Objectives
- Familiarize oneself with the operations of exchanging plant assets and the recognition of gains or losses.
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