Question

Blossom is a cologne retailer. During 2020, Blossom had the following non-monetary transactions. Scenario 1: Blossom exchanged 5,500 of its common shares (FMV of $10 each) for equipment with a FMV of $60,500. Scenario 2: Blossom traded machinery with a cost of $14,000 and accumulated depreciation of $5,600 for an inventory management equipment owned by Francis Inc. which is expected to help increase the speed with which Blossom fills its orders. An additional $3,000 was paid by Blossom in the exchange. The inventory management equipment has a cost of $18,800 and accumulated depreciation of $11,280 on Francis' accounting records. Fair values for the machinery and the inventory management equipment are $9,500 and $12,500 respectively. For each of the above independent scenarios, prepare the journal entry necessary to record the transaction, assuming that Blossom follows IFRS. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter for the amounts.) No. Account Titles and Explanation Debit Credit Scenario 1 Scenario 2

Answer 1

Answer
No.	Account title and Explanation	Debit	Credit
Scenario 1	Equipment (use market value)	$     60,500
	Common stock		$     60,500
	[Exchanged common shares for equipment]
Scenario 2	Equipment	$     12,500
	Accumulated depreciation-Machinery	$       5,600
	Machinery		$     14,000
	Cash		$       3,000
	Gain on disposal of machinery		$       1,100
	[Traded machinery for an inventory management equipment]