Chapter 10:  Fixed Assets and Intangible Assets 133

Subject:AccountingPrice: Bought3

Share With

Chapter 10:  Fixed Assets and Intangible Assets

133.  On the first day of the fiscal year, a new walk-in cooler with a list price of $58,000 was acquired in exchange foran old cooler and $44,000 cash.  The old cooler had a cost of $25,000 and accumulated depreciation of $16,000.Assume the transaction has commercial substance.

a)          Determine the gain to be recorded on the exchange.

b)         Journalize the entry to record the exchange.

 

134.  Equipment acquired on January 2, Year 1, at a cost of $525,000 has an estimated useful life of eight years and anestimated residual value of $45,000.

Required:

(1)             What is the annual amount of depreciation for the first three years, assuming thestraight-line method of depreciation is used?

(2)             What is the book value of the equipment on January 1, Year 4?

(3)             Assuming that the equipment is sold on January 2, Year 4, for $326,000, journalize theentry to record the sale.

(4)             Assuming that the equipment is sold on January 2, Year 4, for $394,000 instead of

$168,500, journalize the entry to record the sale.