Important Journal Entires

Important Journal Entires - BMGT310 Final Review Important...

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BMGT310 – Final Review – Important Journal Entries Ch. 10 – Acquisition and Disposition of Property, Plant, and Equipment Exchanges – Loss Situation: Exchange has commercial substance, used machine BV= $8000 (original cost of $12,000 - $4,000 accumulated depreciation), with a fair value of $6000. New model lists for $16,000, and gets a $9,000 trade-in allowance for the used machine. Cost of New Machine = $13,000 Equipment 13,000 Accumulated Depreciation – Equipment 4,000 Loss on Disposal of Equipment 2,000 Equipment 12,000 Cash 7,000 Exchanges – Gain Situation: Exchange has commercial substance. Used trucks have combined book value of $42,000 (cost $64,000 less $22,000 acc. Dep) Used trucks have a market value of $49,000, and the company must pay $11,000 cash for the new truck. Cost of New Truck = $49k (FMV) + $11k Cash = 60,000 Semi-Truck (New) 60,000 Acc. Dep – Old Trucks 22,000 Old Trucks 64,000 Gain on Disposal of Used Trucks 7,000 Cash 11,000 Lacks Commercial Substance – No Cash Received ( Use previous data), defer gain of $7,000 and reuce the basis of semi-truck. Fair value (60K) – Gain Deferred (7k) = Basis of Semi Truck ($53,000)
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OR Book value of used trucks (42,000) + cash paid (11,000) = Basis of Semi-Truck ($53,000) Semi-Truck (New) 53,000 Acc. Dep – Trucks 22,000 Trucks 64,000 Cash 11,000 Lacks Commercial Substance – Some Cash Received: Trade machinery with BV of $60,000 ($110,000 less acc. Dep. $50,000), with FMV of $100,000. Exchange for machine of FMV of $90,000 plus cash of $10,000. Cash Received (Boot) / (Cash Received + Fair Value of Other Assets) x Total Gain = Recognized Gain Cash 10,000 Machine 54,000 Acc. Dep – Machine 22,000 Machine 110,000 Gain on Disposal of Machine 4,000 Contributions: Gift of land to build on with FMV of $150,000 by the receiver
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Important Journal Entires - BMGT310 Final Review Important...

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