Question Details

Show the calculation of the amount of the gain or loss to be recognized by Rogers Co.


Pr. 1—Non-monetary exchanges.
Moore Corporation follows a policy of a 10% depreciation charge per year on all machinery and a 5% depreciation charge per year on buildings. The following transactions occurred in 2011:
March 31, 2011—	Negotiations which began in 2010 were completed and a warehouse purchased 1/1/02 (depreciation has been properly charged through December 31, 2010) at a cost of $3,200,000 with a fair value of $2,000,000 was exchanged for a second warehouse which also had a fair value of $2,000,000. The exchange had no commercial substance. Both parcels of land on which the warehouses were located were equal in value, and had a fair value equal to book value.

June 30, 2011—	Machinery with a cost of $240,000 and accumulated depreciation through January 1 of $180,000 was exchanged with $150,000 cash for a parcel of land with a fair value of $230,000.The exchange had commercial substance.

Instructions
Prepare all appropriate journal entries for Moore Corporation for the above dates.

Pr. 2—Non-monetary exchange.
Rogers Co. had a sheet metal cutter that cost $96,000 on January 5, 2006. This old cutter had an estimated life of ten years and a salvage value of $16,000. On April 3, 2011, the old cutter is exchanged for a new cutter with a fair value of $48,000. The exchange had commercial substance. Rogers also received $12,000 cash. Assume that the last fiscal period ended on December 31, 2010, and that straight-line depreciation is used.

Instructions
(a)	Show the calculation of the amount of the gain or loss to be recognized by Rogers Co.
(b)	Prepare all entries that are necessary on April 3, 2011. 



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