ACC 304 Quiz 3 Chapter 10.docx

# ACC 304 Quiz 3 Chapter 10.docx - Question 1 Correct A...

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Question 1 Correct. A machine cost \$600,000, has annual depreciation of \$100,000, and has accumulated depreciation of \$450,000 on December 31, 2014. On April 1, 2015, when the machine has a fair value of \$137,500, it is exchanged for a machine with a fair value of \$675,000 and the proper amount of cash is paid. The exchange had commercial substance. The gain to be recorded on the exchange is \$25,000 \$75,000 \$0 \$12,500

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Don't show me this message again for the assignment Click if you would like to Show Work for this question: Open Show Work Solution Close Question 1 \$137,500 – (\$600,000 – \$475,000) = \$12,500. Question 2 Correct. Dodson Company traded in a manual pressing machine for an automated pressing machine and gave \$24,000 cash. The old machine cost \$279,000 and had a net book value of \$213,000. The old machine had a fair value of \$180,000. Which of the following is the correct journal entry to record the exchange? Equipment 369,000 Accumulated Depreciation 66,000 Equipment 279,000 Cash 24,000 Equipment 204,000 Equipment 120,000 Cash 24,000
Equipment 204,000 Loss on Disposal 33,000 Accumulated Depreciation 66,000 Equipment 279,000 Cash 24,000 Cash 24,000 Equipment 180,000 Loss on Disposal 33,000 Accumulated Depreciation 66,000 Equipment 303,000 Solution Close Question 2 Equipment = \$180,000 + \$24,000; Loss: \$213,000 – \$180,000 = 33,000. Question 3 Correct. Woodson Company, a company who uses IFRS reporting standards, has identified a group of plant assets for disposal. On January 1, 2014, the carrying value of these assets was \$14.5 million. The assets were revalued to \$13.5 million on January 5, 2014, when they were identified as property for the disposal group. In addition, Woodson thinks that it will cost \$1.5 million to sell these assets. What

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