On September 3, 2018, the Robers Company exchanged equipment with Phifer Corpora

Question

On September 3, 2018, the Robers Company exchanged equipment with Phifer Corporation. The facts of the exchange are as follows: Robers Asset Phifer's Asset Original cost Accumulated depreciation Fair value $125,000 59,000 76,500 $145,000 67,000 70,500 To equalize the exchange, Phifer paid Robers $6,000 in cash. Required Record the exchange for both Robers and Phifer. The exchange has commercial substance for both companies. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Explanation / Answer

SOLUTION:

Debit Credit Cash 6,000 Equipment—new 70,500 Accumulated depreciation—old asset 59,000 Equipment—old 125,000 Gain on exchange of assets 10,500 Equipment—new 76,500 Accumulated depreciation—old asset 67,000 Loss on exchange of assets 7,500 Cash 6,000 Equipment—old 145,000

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