Pr 8-9 Nonmonetary Exchanges On August 1, Windsor, Inc. exchanged productive ass

Question

Pr 8-9 Nonmonetary Exchanges On August 1, Windsor, Inc. exchanged productive assets with Sheridan, Inc. Windsor's asset is referred to as “Asset A" in the table below and Sheridan, Inc.'s asset is referred to as "Asset B. The following facts pertain to these assets. Windsor Shandon Asset AAsset B $132,480 $151,80D Accumulated depreciation (to date of exchange) S,200 64,860 Original cost 82,800 103,500 Fair value at date of exchange Cash paid by Windsor, Inc. Cash recelved by Sherldan, Inc. 20,700 20,700 Assuming that the exchange of Assets A and B has commercial substance, record the exchange for both Windsor, Inc. and Sheridan, Inc. in accordance with generally accepted accounting principles. a) Windsor, Inc.'s Books Date Account Title Debit Credit Foss& Sheridan, Inc.'s Books Debit Credit Date Account Title Assuming that the exchange of Assets A and B lacks commercial substance, record the exchange for both Windsor, Inc. and Sheridan, Inc. in accordance with generally accepted accounting principles b) Windsor, Inc.'s Books Date Account Title Debit Credit

Explanation / Answer

WINDSOR :-

SHERIDAN :-

b) If the asset has no commercial substance , the assets are recorded at the book value of the assets exchanged itself.

WINDSOR :

SHERIDAN

To Asset B

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WINDSOR :-

Asset B 103500 Accumulated depreciation of Asset A 55200 To Asset A 132480 To Cash 20700 To Profit on sale 5520 (Being exchange of asset recorded)

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