Problem 10-9 (Part Level Submission) On August 1, Skysong, Inc. exchanged produc

Question

Problem 10-9 (Part Level Submission) On August 1, Skysong, Inc. exchanged productive assets with Concord, Inc. Skysong's asset is referred to below as Asset A," and Concord' is referred to as "Asset B. The following facts pertain to these assets. Asset A Original cost Accumulated depreciation (to date of exchange) Fair value at date of exchange Cash paid by Skysong, Inc Cash received by Concord, Inc. $109,440 45,600 68,400 17,100 Asset B $125,400 53,580 85,500 17,100 Assuming that the exchange of Assets A and B has commercial substance, record the exchange for both Skysong, Inc. and Concord, Inc. in accordance with generally accepted accounting principles. (Round answers to 0 decimal places, e.g. S,275. Credit account titles are automatically indented when amount is entered. Do not indent manually-zr no entry is required, select "No Entry-for the account titles ond enter 0 for the amounts. )

Explanation / Answer

Skysong Inc's Books Accounts Title and explaination Debit Credit Machinery (B) $ 85,500 Accumulated Depreciation - Machinery (A) $ 45,600 Machinery (A) $ 1,09,440 Gain on Disposal of Machinery $       4,560 Cash $     17,100 (Being Exchange recorded in the books of Skysong Inc) Workings: Calculation of Gain on Disposal of Machinery Book Value of Old Machinery ($1,09,440 - $45,600) = $     63,840 Fair Value of Old Machinery = $     68,400 Gain = $       4,560 Concord Inc's Books Accounts Title and explaination Debit Credit Cash $ 17,100 Machinery (A) $ 68,400 Accumulated Depreciation - Machinery (B) $ 53,580 Machinery (B) $ 1,25,400 Gain on Disposal of Machinery $     13,680 (Being Exchange recorded in the books of Concord Inc) Workings: Calculation of Gain on Disposal of Machinery Book Value of Old Machinery ($1,25,400 - $53,580) = $     71,820 Fair Value of Old Machinery = $     85,500 Gain = $     13,680

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