Question
In: Accounting
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 |
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