Business, 09.10.2019 01:10 ava108

Cheng corporation exchanges old equipment for new equipment. the original cost of the old equipment was $90,000, and its accumulated depreciation at the date of exchange was $40,000. the new equipment received had a fair value of $40,000 and a book value of $35,000. the journal entry to record this exchange will include which of the following entries?

Answers: 2

Show answers

Answers

Answer from: andybiersack154

Cr Equipment90000

Db Depreciation 40000

Db Equpment Book value35000

Db Loss on exchange of equipment 15000

Explanation:

Fair Value Vs. Book Value. Typically, fair value is the current price for which an asset could be sold on the open market. Book value usually represents the actual price that the owner paid for the asset.

Original cost90000

Depreciation40000

Net Book value50000

Fair value40000

Book Value35000

Cr Equipment90000

Db Depreciation 40000

Db Equpment Book value35000

Db Loss on exchange of equipment 15000

Answer from: abdullahs4639

The question is incomplete. There are no options to select from. In any case, the journal entries which would be recorded are as follows:

Option 1: separate entries

Entry 1:

Debit Accumulated depreciation- Equipment(old) $40,000

Credit Equipment(old) $40,000

Entry 2:

Debit Equipment (new) $40,000

Debit Loss on disposal $10,000

Credit Equipment(old) $50,000

Option 2: combined journal entry

Debit Accumulated Depreciation-Equipment(old) $40,000

Debit Equipment (new) $40,000

Debit Loss on disposal $10,000

Credit Equipment(old) $90,000

Explanation:

Cheng corporation exchanged traded in old equipment for new equipment. Firstly, the substance (or reason for) the transaction must be established. In this case, Cheng Corporation anticipates to generate future cash flows from this trade in arrangement making this a commercial exchange. In a commercial exchange, the asset received is recorded at fair value. Fair value is the price attached to an asset by market forces of demand and supply.

The journal entries after this exchange are as follows:

First entry: close off accumulated depreciation against the asset to determine book value at date of the exchange:

Debit Accumulated depreciation- Equipment(old) $40,000

Credit Equipment(old) $40,000

After the first journal entry, equipment value in cost account is $50,000($90,000-$40,000)

Second entry: recognise new asset and any gains or losses at the exchange date

Debit Equipment (new) $40,000

Debit Loss on disposal $10,000

Credit Equipment(old) $50,000

Answer from: Quest

I'm pretty sure it's true

Answer from: Quest

The advantage of administering personality tests on employees is that it will allow the employer to know the mindset and personality of the employee. this will allow the employer to at least have an idea as to how the employee works and how his attitude in the workplace. the disadvantage is that it may make the employee a little anxious as to whether he would meet the personality requirements of the employer and whether he would be able to retain the job or not.

Another question on Business

Business, 23.06.2019 01:00

Jimmy's delicatessen sells large tins of tom tucker's toffee. the deli uses a periodic review system, checking inventory levels every 88 days, at which time an order is placed for more tins. order lead time is 22 days. daily demand is a constant 1515 tins, so average demand during the reorder period and order lead time (1010 days) is 150150 tins. draw a sawtooth diagram. assume that the beginning inventory level is equal to the restocking level and the desired service level is 99.9%. what is the safety stock level? (hint: look at the formula for calculating restocking level.) what is the average inventory level? the safety stock level is average inventory level is __chart: time (10,20,30), tins (0,150) lines touching both axisthe safety stock level is 0 tinsthe average inventory level is 75 tins

Answers: 2

Answer

Business, 23.06.2019 04:00

Management training programs, mentoring programs, and coaching systems are examples of

Answers: 1

Answer

Business, 23.06.2019 16:10

Aconsumer would pay an extra if they used the rent to own program to buy the computer, rather than using cash. for all of the items, using is the cheapest option over the life of the contract. the most expensive overall option is to use to purchase the item.

Answers: 3

Answer

Business, 23.06.2019 21:00

During winter, red foxes hunt small rodents by jumping into thick snow cover. researchers report that a hunting trip lasts on average 19 minutes and involves on average 7 jumps. they also reported that, surprisingly, 79% of all successful jumps are made in the northeast direction. three variables are mentioned in this report. the third variable mentioned is

Answers: 2

Answer

You know the right answer?

Cheng corporation exchanges old equipment for new equipment. the original cost of the old equipment...

Questions