Exercise 10-19 - EXERCISE 10-19 (1520 minutes) (a) Exchange...

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EXERCISE 10-19 (15–20 minutes) (a) Exchange lacks commercial substance. Carlos Arruza Company: Equipment . ................................................................. 12,000 Accumulated Depreciation . .................................. 19,000 Equipment . ...................................................... 28,000 Cash. .................................................................. 3,000 Valuation of equipment Book value of equipment given $ 9,000 Fair value of boot given 3,000 New equipment $12,000 OR Fair value received $15,500 Less: Gain deferred 3,500* New equipment $12,000 *Fair value of old equipment $12,500 Book value of old equipment (9,000) Gain on disposal $ 3,500 Note: Cash paid is less than 25%, the transaction is nonmonetary, so the gain is deferred. Tony Lo Bianco Company: Cash . .................................................................................. 3,000 Equipment . ....................................................................... 12,500 Accumulated Depreciation—Equipment. ............... 10,000
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This note was uploaded on 06/06/2010 for the course ACCOUNTING ac505 taught by Professor Khan during the Spring '10 term at DeVry Fremont.

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Exercise 10-19 - EXERCISE 10-19 (1520 minutes) (a) Exchange...

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