P10-8 (Nonmonetary Exchanges) Holyfield Corporation wishes to exchange a machine
ID: 2421404 • Letter: P
Question
P10-8 (Nonmonetary Exchanges) Holyfield Corporation wishes to exchange a machine used in its operations. Holyfield has received the following offers from other companies in the industry.
1. Dorsett Company offered to exchange a similar machine plus $23,000. (The exchange has commercial substance for both parties.)
2. Winston Company offered to exchange a similar machine. (The exchange lacks commercial substance for both parties.)
3. Liston Company offered to exchange a similar machine, but wanted $3,000 in addition to Holyfield’s machine. (The exchange has commercial substance for both parties.)
In addition, Holyfield contacted Greeley Corporation, a dealer in machines. To obtain a new machine, Holyfield must pay $93,000 in addition to trading in its old machine.
Holyfield
Dorsett
Winston
Liston
Greeley
Machine Cost
$160,000
$120,000
$152,000
$160,000
$130,000
Accumulated Depreciation
$60,000
$45,000
$71,000
$75,000
-0-
Fair Value
$92,000
$69,000
$92,000
$95,000
$185,000
For each of the four independent situations, prepare the journal entries to record the exchange on the books of each company.
Holyfield
Dorsett
Winston
Liston
Greeley
Machine Cost
$160,000
$120,000
$152,000
$160,000
$130,000
Accumulated Depreciation
$60,000
$45,000
$71,000
$75,000
-0-
Fair Value
$92,000
$69,000
$92,000
$95,000
$185,000
Explanation / Answer
Journal Entries:
1: In the books of Holyfield:
In the books of dorsett:
2. In the books of Holyfield:
In the books of Winston:
3. In the books of Holyfield:
In the books of Liston:
4. In the books of Holyfield:
In the books of Greeley:
Date Accounts Title and explanation Debit $ Credit $ Dorsett machine 120000 Accumulated Depreciation 60000 cash 23000 loss on exchange 2000 Accumulated Depreciation- Dorsett 45000 Machine 160000Related Questions
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