Question

On January 1, 2010 Apple Company purchased a building in Bartlett for $1,000,000. Apple expected the...

On January 1, 2010 Apple Company purchased a building in Bartlett for $1,000,000. Apple expected the building to last 20 years and have an $80,000 salvage value. Apple uses straight-line depreciation. On January 1, 2018, Apple exchanged this Bartlett building for a building in West Memphis. The West Memphis Building has a fair market value of $670,000. In addition to giving up the building, Apple paid $50,000 in cash. REQUIRED: MAKE THE JOURNAL ENTRY APPLE MADE WHEN IT EXCHANGED THE BARTLETT BUILDING FOR THE WEST MEMPHIS BUILDING.

Homework Answers

Answer #1

Journal Entry for the given transaction:

Building in West memphis A/c. Dr. $ 670000

Profit and loss A/c. Dr. $ 12000

   To Barlett Building A/c. $ 632000

To Bank A/c. $ 50000

(Being Barlett Building got exchanged with Building in West memphis)

Note: WDV of Barlett building as on 01.01.2018 :

Depreciation per annum = (Original cost - scrap value)/useful life

   = ($1000000-$80000)/20 = $ 46000

​WDV as on 01.01.2018 = $1000000 - ($46000*8) = $ 632000

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
On January 1, 2010, the Felix Company purchased a machine to use in the manufacture of...
On January 1, 2010, the Felix Company purchased a machine to use in the manufacture of its product. The invoice cost of the machine was $260,000. At the time of acquisition, the machine had an original estimated useful life of 10 years and an estimated salvage value of $20,000. Annual depreciation was recorded at $24,000 per year. The machine was depreciated using the straight-line method. On August 1, 2015, Felix exchanged the old machine for a newer model. The new...
On January 1, 2010, the Felix Company purchased a machine to use in the manufacture of...
On January 1, 2010, the Felix Company purchased a machine to use in the manufacture of its product. The invoice cost of the machine was $260,000. At the time of acquisition, the machine had an original estimated useful life of 10 years and an estimated salvage value of $20,000. Annual depreciation was recorded at $24,000 per year. The machine was depreciated using the straight-line method. On August 1, 2015, Felix exchanged the old machine for a newer model. The new...
9. Milan Company purchased land and an office building on March 1 for a combined cash...
9. Milan Company purchased land and an office building on March 1 for a combined cash price of $1,600,000. The land had a cost of $940,000 and the building had a book value of $200,000 on the seller's books. The land and building had fair market values of $1,040,000 and $560,000, respectively on March 1. Milan made the following entry at acquisition: Land ........................................................................................... 940,000 Building ...................................................................................... 1,000,000 Gain on Purchase .............................................................. 140,000 Accumulated Depreciation ................................................. 200,000 Cash .................................................................................. 1,600,000...
On January 1, 2018, Algo Company purchased a truck for $50,000. Salvage value is expected to...
On January 1, 2018, Algo Company purchased a truck for $50,000. Salvage value is expected to be $5,000. The truck's useful life is expected to be 5 year. The company uses the straight-line depreciation expense method to record depreciation. What is the truck's December 31, 2019 net book value after the recording of the 2019 depreciation expense?
June 30, 2020    A building that Big Company had purchased on January 1, 2016, for $...
June 30, 2020    A building that Big Company had purchased on January 1, 2016, for $ 10,000 was exchanged for another building owned by Other Company. Big Company exchanged its building and $1,000 cash for Other Company’s building. Big’s building had a fair value of $ 9,500 at the time of the exchange. Straight-line depreciation on the building with a 40-year useful life and no R.V. has been properly charged from Jan. 1, 2016 through Dec. 31, 2019. Both parcels...
On January 1, 2016, Maria Company purchased a building and machinery that have the following useful...
On January 1, 2016, Maria Company purchased a building and machinery that have the following useful lives, salvage value, and costs. Building, 25-year estimated useful life, $9,480,000 cost, $948,000 salvage value Machinery, 10-year estimated useful life, $1,700,000 cost, no salvage value The building has been depreciated under the straight-line method through 2020. In 2021, the company decided to switch to the double-declining balance method of depreciation for the building. Maria also decided to change the total useful life of the...
Wardell Company purchased a mainframe on January 1, 2016, at a cost of $56,000. The computer...
Wardell Company purchased a mainframe on January 1, 2016, at a cost of $56,000. The computer was depreciated using the straight-line method over an estimated five-year life with an estimated residual value of $11,000. On January 1, 2018, the estimate of useful life was changed to a total of 10 years, and the estimate of residual value was changed to $2,000. Required: 1. Prepare the year-end journal entry for depreciation in 2018. No depreciation was recorded during the year. 2....
On January 1, 2017, Sandhill Company purchased a building and equipment that have the following useful...
On January 1, 2017, Sandhill Company purchased a building and equipment that have the following useful lives, salvage values, and costs. Building, 40-year estimated useful life, $49,200 salvage value, $828,000 cost Equipment, 12-year estimated useful life, $11,200 salvage value, $99,400 cost The building has been depreciated under the double-declining-balance method through 2020. In 2021, the company decided to switch to the straight-line method of depreciation. Sandhill also decided to change the total useful life of the equipment to 9 years,...
On January 1, 2013, Ameen Company purchased a building for $38 million. Ameen uses straight-line depreciation...
On January 1, 2013, Ameen Company purchased a building for $38 million. Ameen uses straight-line depreciation for financial statement reporting and MACRS for income tax reporting. At December 31, 2017, the book value of the building was $32 million and its tax basis was $22 million. At December 31, 2018, the book value of the building was $30 million and its tax basis was $15 million. There were no other temporary differences and no permanent differences. Pretax accounting income for...
Annual depreciation expense on a building purchased a few years ago (using the straight-line method) is...
Annual depreciation expense on a building purchased a few years ago (using the straight-line method) is $4,800. The cost of the building was $96,000. The current book value of the equipment (January 1, 2018) is $81,600. At the time of purchase, the asset was estimated to have a zero salvage value. On January 1, 2018, the company decided to reduce the original useful life by 25% and to establish a salvage value of $4,800. The firm also decided double-declining-balance depreciation...