Exercise 10-20 - Book value 42,000 Fair market value of old...

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EXERCISE 10-20 (15–20 minutes) (a) Exchange has commercial substance Automatic Equipment. ................................................ 56,900 Accumulated Depreciation—Equipment. ............. 20,000 Gain on Disposal of Equipment . .................. 5,800 Equipment . .......................................................... 62,000 Cash. ...................................................................... 9,100 Valuation of equipment Cash $ 8,000 Installation cost 1,100 Market value of used equipment 47,800 Cost of new equipment $56,900 Computation of gain Cost of old asset $62,000 Accumulated depreciation 20,000
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Unformatted text preview: Book value 42,000 Fair market value of old asset 47,800 Gain on disposal of equipment $ 5,800 (b) Exchange lacks commercial substance Automatic Equipment. ................................................ 51,100* Accumulated DepreciationEquipment. ............. 20,000 Equipment . .......................................................... 62,000 Cash. ...................................................................... 9,100 *Basis of new equipment Book value of old equipment $42,000 Cash paid (including installation costs) 9,100 Basis of new equipment $51,100...
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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 10-20 - Book value 42,000 Fair market value of old...

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