ThefollowinginformationisextractedfromthebooksofReginaCompany AssetsTransferred Crane Originalcost Kshs5,000,000 Accumulateddepreciation,updatedtodateofexchange Kshs 4,000,000 ThefollowingdifferentscenariosrelatetoReginaCompanyandtheCrane. a.Assumethatac

ThefollowinginformationisextractedfromthebooksofReginaCompany
AssetsTransferred Crane
Originalcost Kshs5,000,000
Accumulateddepreciation,updatedtodateofexchange Kshs
4,000,000
ThefollowingdifferentscenariosrelatetoReginaCompanyandtheCrane.
a.AssumethatacranehasafairvalueofKshs1,200,000andisexchangedfora
usedtruck whosevalueisnotmoreclearlydeterminable;nocashispaidor
received.ThebookvalueofthecraneisKshs1,000,000.
b.AssumethatthefairvalueofthecraneisstillKshs1,200,000butthatRegina
alsopaysKshs90,000toobtaintheusedtruck
c.AssumeReginaexchangesthecraneforanothercrane.
d.Assumethatthecranesareswapped,butKshs60,000ispaidbyRegina
e.Assumethatinstead,thatReginamustpayKshs420,000intheexchangeofthe
cranes.TheoldcranehasafairvalueofKshs800,000andthenewcranehas
beenappraisedatKshs1,400,000.
f.AssumethatReginahasanestimatedfairvalueoftheCraneisKshs850,000
andthatthisvalueismoreclearlydeterminable.ReginastillpaysKshs420,000in
exchangeofanothercrane.
Required:Journalentriesforeachscenario

journal entries for each transaction

Solutions

Expert Solution

Date	Particulars	Debit	Credit
Question - A	Truck	$ 12,00,000
	Accumulated Depreciation	$ 40,00,000
	Crane		$ 50,00,000
	Gain on Exchange		$ 2,00,000

Question - B	Truck	$ 10,90,000
	Accumulated Depreciation	$ 40,00,000
	Crane		$ 50,00,000
	Cash		$ 90,000

Question - C	New Crane	$ 10,00,000
	Accumulated Depreciation	$ 40,00,000
	Crane		$ 50,00,000

Question - D	Truck	$ 10,60,000
	Accumulated Depreciation	$ 40,00,000
	Crane		$ 50,00,000
	Cash		$ 60,000

Question - E	New Crane	$ 12,00,000
	Accumulated Depreciation	$ 40,00,000
	Loss in Exchange	$ 2,20,000
	Crane		$ 50,00,000
	Cash		$ 4,20,000

Question - F	New Crane	$ 12,70,000
	Accumulated Depreciation	$ 40,00,000
	Loss in Exchange	$ 1,50,000
	Crane		$ 50,00,000
	Cash		$ 4,20,000

ekkarill92 answered 1 year ago

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