Splish Corporation wishes to exchange a machine used in its
operations. Splish has received the following offers from other
companies in the industry.
1. | Blossom Company offered to exchange a similar machine plus $25,300. (The exchange has commercial substance for both parties.) | |
2. | Blue Company offered to exchange a similar machine. (The exchange lacks commercial substance for both parties.) | |
3. | Kingbird Company offered to exchange a similar machine, but wanted $3,300 in addition to Splish’s machine. (The exchange has commercial substance for both parties.) |
In addition, Splish contacted Oriole Corporation, a dealer in
machines. To obtain a new machine, Splish must pay $102,300 in
addition to trading in its old machine.
Splish |
Blossom |
Blue |
Kingbird |
Oriole |
||||||
Machine cost | $176,000 | $132,000 | $167,200 | $176,000 | $143,000 | |||||
Accumulated depreciation | 66,000 | 49,500 | 78,100 | 82,500 | –0– | |||||
Fair value | 101,200 | 75,900 | 101,200 | 104,500 | 203,500 |
For each of the four independent situations, prepare the journal
entries to record the exchange on the books of each company.
(Credit account titles are automatically indented when
amount is entered. Do not indent manually. If no entry is required,
select "No Entry" for the account titles and enter 0 for the
amounts.)
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