Question

Brief Exercise 7-16 Account for the exchange of long-term assets (L07-6) China Inn and Midwest Chicken exchanged assets. China Inn received a delivery truck and gave equipment. The fair value and book value of the equipment were $17,500 and $10,200 (original cost of $36,000 less accumulated depreciation of $25,800), respectively. To equalize market values of the exchanged assets, China Inn paid $8,100 in cash to Midwest Chicken 1. At what amount did China Inn record the delivery truck? Delivery truck s 25,600 2. How much gain or loss did China Inn recognize on the exchange?

Answer 1

Solution General Journal Debit, . Credit 25600 25800 7300 Equipment Accumulated depreciation Gain on exchange cash Delivery truck (equipment) 8100 36000 1) At what amount did china Inn record the delivery truck. = 25600 2) How much garn or loss Inn orecognize on the exchange. = 7300