Jaeger company exchanged machinery with an appraised value of $195,000, a record
ID: 2489077 • Letter: J
Question
Jaeger company exchanged machinery with an appraised value of $195,000, a record cost of $270,000 an accumulated depreciation of $140,000 with Paris Corporation for machinery Paris owns. Pari's Machinery has an appraised value of $180,000 a record cost of $324,000, and Accumulated Depreciation of $190,000. PAris also gave Jaeger $15,000 in the exchange. Assume depreciation has already been updated.
Instructions---
1. Prepare the entries on Jaeger's books assuming that the transaction had commercial substance (Disimilar)
2. Prepare the entries on Paris's books assuming that the transaction had commercial substance (Disimilar)
3. Assume the transaction lacked commercial substance, how much of the gain/lose, if any would be recoded on Paris's books.
Explanation / Answer
1.
Entries on Jaeger's books assuming that the transaction had commercial substance
2.
Entries on Paris's books assuming that the transaction had commercial substance
46,000
3.
Gain or loss when transaction lacked commercial substance, would be recoded on Paris's books as follows:
No gain or loss will be recorded in such case.
Jaegar Company Date Particulars L.F Amount ($) Amount ($) Machinery 1,80,000 Accumulated depreciation 1,40,000 Cash 15,000 Machinery 2,70,000 Gain on exchange of machinery 65,000 (For machinery exchange with commercial substance)Related Questions
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