Question Details

Which of the following would be correct for Stanton to record 



1.	Dodson Company traded in a manual pressing machine for an automated pressing machine and gave $8,000 cash. The old machine cost $93,000 and had a net book value of $71,000. The old machine had a fair market value of $60,000.

		Which of the following is the correct journal entry to record the exchange?
a.	Equipment	68,000
	Loss on Exchange	11,000
	Accumulated Depreciation	22,000
	Equipment	93,000
	Cash	8,000
b.	Equipment	68,000
	Equipment	60,000
	Cash	8,000
c.	Cash	8,000
	Equipment	60,000
	Loss on Exchange	11,000
	Accumulated Depreciation	22,000
		Equipment	101,000
d.	Equipment	123,000
	Accumulated Depreciation	22,000
	Equipment	93,000
	Cash	8,000

Use the following information to answer questions 2 & 3.
Below is the information relative to an exchange of assets by Stanton Company. The exchange lacks commercial substance.

	Old Equipment	
	Book Value	Fair Value	Cash Paid
Case I	$75,000	$85,000	$15,000
Case II	$50,000	$45,000	$7,000

	2.	Which of the following would be correct for Stanton to record in Case I?

	Record Equipment at:	Record a gain of (loss) of:
a.	$90,000	$0
b.	$100,000	$10,000
c.	$75,000	$(5,000)
d.	$90,000	$10,000

	3.	Which of the following would be correct for Stanton to record in Case II?

	Record Equipment at:	Record a gain of (loss) of:
a.	$57,000	$5,000
b.	$50,000	$2,000
c.	$52,000	$(5,000)
d.	$50,000	$(2,000)

Use the following information for questions 4 and 5.
Glen Inc. and Armstrong Co. have an exchange with no commercial substance. The asset given up by Glen Inc. has a book value of $12,000 and a fair market value of $15,000. The asset given up by Armstrong Co. has a book value of $20,000 and a fair market value of $19,000. Boot of $4,000 is received by Armstrong Co.
	4.	What amount should Glen Inc. record for the asset received?
a.	$15,000
b.	$16,000
c.	$19,000
d.	$20,000

	5.	What amount should Armstrong Co. record for the asset received?
a.	$15,000
b.	$16,000
c.	$19,000
d.	$20,000





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