Acquisition and Disposition of Property, Plant, and Equipment

BE10.10 (LO 3) Mehta Company traded a used welding machine (cost $9,000, accumulated depreciation $3,000) for offi ce equipment with an estimated fair value of $5,000. Mehta also paid $3,000 cash in the transaction. Prepare the journal entry to record the exchange. (The exchange has commercial substance.)

BE10.11 (LO 3) Cheng Company traded a used truck for a new truck. The used truck cost $30,000 and has accumulated depreciation of $27,000. The new truck is worth $37,000. Cheng also made a cash payment of $36,000. Prepare Cheng’s entry to record the exchange. (The exchange lacks commercial substance.)

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Expert Solution

BRIEF EXERCISE 10-10

Equipment...............................................................	5,000
Accumulated Depreciation—Machinery...........	3,000
Loss on Disposal of Machinery..........................	4,000
Machinery......................................................		9,000
Cash...............................................................		3,000

BRIEF EXERCISE 10-11

Trucks (new)...........................................................	37,000
Accumulated Depreciation—Trucks.................	27,000
Loss on Disposal of Trucks................................	2,000
Trucks (used)................................................		30,000
Cash...............................................................		36,000

BRIEF EXERCISE 10-10

Equipment...............................................................	5,000
Accumulated Depreciation—Machinery...........	3,000
Loss on Disposal of Machinery..........................	4,000
Machinery......................................................		9,000
Cash...............................................................		3,000

BRIEF EXERCISE 10-11

Trucks (new)...........................................................	37,000
Accumulated Depreciation—Trucks.................	27,000
Loss on Disposal of Trucks................................	2,000
Trucks (used)................................................		30,000
Cash...............................................................		36,000

devender singh answered 1 year ago

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