China Inn and Midwest Chicken exchanged assets. Midwest Chicken received equipment and gave a delivery truck. The fair value and book value of the delivery truck given were $24,000 and $27,000 (original cost of $32,000 less accumulated depreciation of $5,000), respectively. To equalize market values of the exchanged assets, Midwest Chicken received $7,500 in cash from China Inn.
1. At what amount did Midwest Chicken record the equipment?
2. How much gain or loss did Midwest Chicken
recognize on the exchange?
1. At what amount did Midwest Chicken record the equipment:-
Record value = Fair value + cash paid
= 24,000 + 7,500
2. How much gain or loss did Midwest Chicken recognize on the exchange:-
Loss on Disposal of Equipment = 3,000
|Account titles and explanation||Debit||Credit|
Loss on Disposal of Equipment
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