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Journalize these transactions: Elastoplast Gmbh trades an old piece of equipment for a commercial vehicle with...

Journalize these transactions:

Elastoplast Gmbh trades an old piece of equipment for a commercial vehicle with a current market value of $75,000. The equipment was bought 5 years ago for $62,000 and was assigned a useful life of 8years ( residual value $2000); the company uses double declining depreciation. In addition to trading in the old equipment, Elastoplast pays the supplier of the vehicle $55,000 in cash
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Answer #1
DDB Rate= 2 *St.line Rate
Useful life= 8 yrs.
So, st.line rate=100/8= 12.5%
DDB Rate= 2 *12.5%= 25%
on the declining balance
Year Depn. For the Yr. Acc. Depn.as at end of Yr. Carrying value
0 62000
1 15500 15500 46500
2 11625 11625 34875
3 8719 8719 26156
4 6539 6539 19617
5 4904 4904 14713
Total 47287
Exchange has commercial substance
New Equipment 75000
Accumulated depreciation 47287
Old Equipment 62000
Cash 55000
Gain on Exchange(Bal.Fig.) 5287
Exchange lacks commercial substance
New Equipment(75000-5287) 69713
Accumulated depreciation 47287
Old Equipment 62000
Cash 55000
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