Question Details

Which of the following is the correct journal entry to record the exchange 



Use the following information for questions 1 and 2.

Gabrielle Inc. and Lucci Company have an exchange with no commercial substance. The asset given up by Gabrielle has a book value of €120,000 and a fair value of €135,000. The asset given up by Lucci has a book value of €220,000 and a fair value of €200,000. Boot of €65,000 is received by Lucci.

1.	What amount should Gabrielle record for the asset received?
a.	€110,000
b.	€135,000
c.	€185,000
d.	€200,000

2.	The journal entry made by Lucci to record the exchange will include
a.	a debit to Gain on Exchange for €20,000.
b.	a credit to Cash for €65,000.
c.	a credit to Equipment for €200,000.
d.	a debit to Loss Exchange for €20,000.
Use the following information for questions 3-5.

On January 1, 2011, in an effort to lure Tar-Mart, a major discount retail chain to the area, the city of Bordeaux agreed to provide the company with a €6,000,000 three-year, Zero-interest bearing note. The prevailing rate of interest for a loan of this type is 10% and the present value of €6,000,000 at 10% for three years is €4,507,800.

3.	In recording the loan and grant, Tar-Mart will
a.	debit Discount on Notes Payable of €1,492,200.
b.	credit Deferred Grant Revenue €1,492,200.
c.	credit Note Payable €6,000,000.
d.	all of these.

 
4.	At the end of 2011, Tar-Mart will recognize
a.	interest expense of €450,780.
b.	grant revenue of €450,780.
c.	interest revenue of €149,220.
d.	none of these.

5.	At December 13, 2011, Tar-Mart will report Deferred Grant Revenue of
a.	€1,492,400.
b.	€1,342,980.
c.	€0.
d.	none of these.

6.	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 book value of $71,000. The old machine had a fair 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



Business Management Assignment Help, Business Management Homework help, Business Management Study Help, Business Management Course Help