Question

BE10.12 (LO 3) Slaton Corporation traded a used truck for a new truck. The used truck cost $20,000 and has accumulated depreciation of $17,000. The new truck is worth $35,000. Slaton also made a cash payment of $33,000. Prepare Slaton’s entry to record the exchange. (The exchange has commercial substance.)

BE10.13 (LO 4) Indicate which of the following costs should be expensed when incurred.

a. $13,000 paid to rearrange and reinstall machinery.

b. $200,000 paid for addition to building.

c. $200 paid for tune-up and oil change on delivery truck.

d. $7,000 paid to replace a wooden fl oor with a concrete floor. e. $2,000 paid for a major overhaul on a truck, which extends the useful life.

 

Answer 1

BRIEF EXERCISE 10-12

 Slaton’s entry to record the exchange. (The exchange has commercial substance.)

Trucks (new)...........................................................	35,000
Accumulated Depreciation—Trucks.................	17,000
Loss on Disposal of Trucks................................	1,000
Trucks (used)................................................		20,000
Cash...............................................................		33,000

 

BRIEF EXERCISE 10-13

 Correct answer is C.

Only cost (c) is expensed when incurred.

BRIEF EXERCISE 10-12

 

 Slaton’s entry to record the exchange. (The exchange has commercial substance.)

Trucks (new)...........................................................	35,000
Accumulated Depreciation—Trucks.................	17,000
Loss on Disposal of Trucks................................	1,000
Trucks (used)................................................		20,000
Cash...............................................................		33,000

 

BRIEF EXERCISE 10-13

 Correct answer is C.

 

Only cost (c) is expensed when incurred.