Briyanne, Inc. purchased a computer for RM5,000. During 2016 and 2017, the company recorded total depreciation of RM4,000 on the computer. On January 1, 2018, the company exchanges the computer for a new one, paying RM4,000 cash. The market value of the new computer is RM6,000. Assume the exchange has commercial substance. Based on the information above: a) Calculate the gain or loss of the exchange. b) Determine the journal entries involved.
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- Llungby AB spent 1,000,000 krone in 2017 on the development of a new product. The company determined that 25 percent of this amount was incurred after the criteria in IAS 36 for capitalization as an intangible asset had been met. The newly developed product is brought to market in January 2018 and is expected to generate sales revenue for five years. Assume that a foreign company using IFRS is owned by a company using U.S. GAAP. Thus, IFRS balances must be converted to U.S. GAAP to prepare consolidated financial statements. Ignore income taxes. Required: Prepare journal entries for development costs for the years ending December 31, 2017, and December 31, 2018, under (1) IFRS and (2) U.S. GAAP. Prepare the entry(ies) that the U.S. parent would make on the December 31, 2017, and December 31, 2018, conversion worksheets to convert IFRS balances to U.S. GAAP.Tainan company decides to exchange its old machine and $2,600,000 cash for a new machine. The old machine has a book value of $1,400,000 and a fair value of $2,400,000 on the date of the exchange. If this transaction has commercial substance, the cost of the new machine would be recorded atMiracle Manufacturing Company Limited (Miracle) has the following transactions relating to its long life productive asset: On 1 February, 2020, the company purchased a sewing machine from Germany with an invoice price of $270,000, legal title fees of $2,500 and sales tax of $8,300. Miracle paid the total amount with $45,000 as down payment and the remaining balance with a Note Payable (ignore the interest expense). Miracle estimated the sewing machine would have a $21,600 residual value and a six-year useful life. On 31 March, 2020 (i.e. the company’s financial year-end), Miracle recorded the adjusting entry for depreciation using the straight line method to the nearest month. On 1 October, 2020, the company sold the sewing machine for $244,800 cash and paid off the Note Payable. Prepare the relevant journal entries for each of the above transactions. Assume the adjusting entries are performed annually on 31 March.
- Champion Industries exchanged a dust-scrubbing piece of equipment for another version of the same type of equipment and received $12,000 cash. The old dust scrubber cost $76,200 and had a net book value of $44,000. The new dust scrubber had a fair market value of $60,000. Prepare the journal entry to record the exchange, assuming that the exchange a) has commercial substance, and b) lacks commercial substance.In October, Dean Company exchanged an old packing machine costing P240,000 and 50% depreciated, for a dissimilar used machine and paid a cash difference of P32,000. The market value of the old packaging machine was determined to be P140,000. How much is the cost of the newly acquired machine and the amount of gain or loss, respectively, that Dean should record on this exchange?Arca Salvage purchased equipment for $10,000. Arca recorded total depreciation of $8,000 on the equipment. Assume that Arca exchanged the old equipment for new equipment, paying $4,000 cash. The fair market value of the new equipment is $5,000. Journalize Arca's exchange of equipment. Assume this exchange has commercial substance. Let's begin by calculating the gain or loss on the exchange of equipment. (Enter a loss with a minus sign or parentheses.) Market value of assets received Less: Book value of asset exchanged Cash paid Gain or (Loss)
- Winn Company exchanged an old machine having a carrying amount of P16,800, and paid a cash difference of P6,000 for a new machine having a total cash price of P20,500. The cash flows from the new machine are expected to be significantly different than the cash flows from the old machine. What amount of loss should Winn recognize on this exchange?Caine Company exchanged a car from inventory for a computer to be used as a long-term asset. The following information relates to this exchange: Carrying amount of the car, 600,000List selling price of the car, 900,000’ Fair value of the computer, 860,000’; Cash difference paid by Caine, 100,000. What is the cost of the computer acquired in exchange?On March 1, 2019, Extreme Company exchanged an old machine having a cost of P450,000 and accumulated depreciation of P100,000 for another machine having a fair market value of P300,000. Extreme Company has to pay P72,000 to even up the trade. Immediately after the exchange. Extreme company determined that the cash flows of the machine received differ from the cash flows of the machine transferred. 51. What is the cost of the machine in the books of Extreme? a. P280,000 b. P300,000 c. P440,000 d. P600,000 52. What amount of loss should the company recognize on the exchange? a. None b. P50,000 c. P122,000 d. P150,000
- Caine Company exchanged a car from inventory for a computer to be used as a long-term asset. The following information relates to this exchange: Carrying amount of the car, 600,000List selling price of the car, 900,000’ Fair value of the computer, 860,000’; Cash difference paid by Caine, 100,000. What is the cost of the computer acquired in exchange? 1. Indicate the appropriate entries requires for each of the transactions. 2. Will Caine company declare a gain or loss on this transaction?Caleb Company owns a machine that had cost $46,000 with accumulated depreciation of $20,200. Caleb exchanges the machine for a newer model that has a market value of $56,000. Record the exchange assuming Caleb paid $31,800 cash and the exchange has commercial substance. Record the exchange assuming Caleb paid $23,800 cash and the exchange has commercial substance.Gilly Construction trades in an old tractor for a new tractor, receiving a $29,000 trade-in allowance and paying the remaining $83,000 in cash. The old tractor had cost $96,000 and had accumulated depreciation of $52,500. Answer the following questions assuming the exchange has commercial substance. 1. What is the book value of the old tractor at the time of exchange? 2. What is the loss on this asset exchange? 3. What amount should be recorded (debited) in the asset account for the new tractor?