Answer:
Waycross Manufacturing
A Schedule, showing cash disbursements by account for July and August:
Category July August
Purchases $ 47,000 $ 49,000
Payroll 121,000 102,000
Loan Payments 12,000 12,000
Total cash disbursements $180,000 $163,000
Explanation:
a) Data:
Predicted activity for selected months follow:
Category May June July August
Purchases $30,000 $46,000 $48,000 $50,000
Payroll 100,000 130,000 120,000 100,000
Loan Payments 10,000 10,000 12,000 12,000
b) Calculations:
Category May June July August
Purchases (50/50) $15,000 $15,000
23,000 $23,000
24,000 $24,000
25,000
Purchases $47,000 $49,000
Payroll (90/10) $90,000 $10,000
117,000 $13,000
108,000 $12,000
90,000
Payroll $121,000 $102,000
Loan Payments (100%) 10,000 10,000 12,000 12,000
When a country (or a person) borrows money to pay yearly debt they are involved in this type of spending.
surplus spending
C. consumer spending
b. deficit spending
d. corporate spending
a.
The following are budgeted data: January February March Sales in units 16,000 22,000 19,000 Production in units 19,000 20,000 18,500 One pound of material is required for each finished unit. The inventory of materials at the end of each month should equal 25% of the following month's production needs. Purchases of raw materials for February would be budgeted to be: Multiple Choice 20,375 pounds 18,375 pounds 19,625 pounds 20,125 pounds
Answer:
Purchases= 19,625 pounds
Explanation:
Giving the following information:
Production in units:
February= 20,000
March= 18,500
The inventory of materials at the end of each month should equal 25% of the following month's production needs.
To calculate the purchases of raw materials, we need to use the following formula:
Purchases= production + desired ending inventory - beginning inventory
Purchases= 20,000 + (18,500*0.25) - (20,000*0.25)
Purchases= 19,625 pounds
a weak home currency may not be the perfect solution to correct a balance of trade deficit because
Answer:
foreign companies may reduce the prices of their products to stay competitive.
can a country expereince economic growth without economic develooment ?
i would just like the people who run this know that priyanka2003 gave an incorrect answer
Answer:
Bruh thats mean smh
Explanation:
Pine Street Inc. makes unfinished bookcases that it sells for $59. Production costs are $38 variable and $10 fixed. Because it has unused capacity, Pine Street is considering finishing the bookcases and selling them for $75. Variable finishing costs are expected to be $8 per unit with no increase in fixed costs. Prepare an analysis on a per unit basis showing whether Pine Street should sell unfinished or finished bookcases.
Answer:
It is more profitable to continue processing the bookcases.
Explanation:
First, we need to calculate the total unitary production cost of each option:
Unfinished:
Total cost= 38 + 10= $48
Finished:
Total cost= 48 + 8= $56
Now, based on the unitary contribution margin, we decide which option is more profitable.
Unfinished:
Unitary contribution margin= 59 - 48= $11
Finished:
Unitary contribution margin= 75 - 56= $19
It is more profitable to continue processing the bookcases.
Sheffield Company originally issued 5400 shares of $10 par value common stock for $162000 ($30 per share). Sheffield subsequently purchases 530 shares of treasury stock for $26 per share and resells the 530 shares of treasury stock for $31 per share. In the entry to record the sale of the treasury stock, there will be a:______.
a. credit to Paid-In Capital from Treasury Stock for $2650.
b. credit to Common Stock for $13780.
c. credit to Treasury Stock for $5300.
d. debit to Paid-In Capital in Excess of Par of $15900.
Answer:
a. credit to Paid-In Capital from Treasury Stock for $2650.
Explanation:
the complete journal entries required to record the 3 operations:
Dr Cash 162,000
Cr Common stock 54,000
Cr Additional paid in capital 108,000
Dr Treasury stock 13,780
Cr Cash 13,780
Dr Cash 16,430
Cr Treasury stock 13,780
Cr Additional paid in capital 2,650
garcia company has 11,600 units of its product that were produced last year at a total cost of $174,000. the units were damaged in a rainstorm because the warehouse where they were stored developed a leak in the roof. garcia can sell the units as is for $2 each or it can repair the units at a total cost of $19,600 and then sell them for $5 each. calculate the incremental net income if the units are repaired
Answer:
If the company repairs the units, income will increase by $15,200.
Explanation:
Giving the following information:
Units= 11,600
Garcia can sell the units as is for $2 each or, it can repair the units at a total cost of $19,600 and then sell them for $5 each.
We will not take into account the original cost of production because they remain constant in both options.
Sell as-is:
Effect on income= 11,600*2= $23,200
Repair:
Effect on income= 11,600*5 - 19,600= $38,400
If the company repairs the units, income will increase by $15,200.
Annual maintenance cost for a particular section of highway pavement are $3,000.The placement of a new surface would reduce the annual maintenance cost to $400 per year for the first 5 years, and to $800 per year for the next 5 years. After 10 years, the annual maintenance cost would again be $3,000. If the maintenance costs are the only saving, how much investment can be justified for the new surface, by assuming interest at 6%
Answer:
$17,877
Explanation:
initial outlay = ?
net cash flows years 1 to 5 = $3,000 - $400 = $2,600
net cash flows years 6 to 10 = $3,000 - $800 = $2,200
assuming that the discount rate is 6%, we need to determine the maximum amount of initial investment that would result in the NPV = 0
in order to do this we have to calculate the present value of the future cash flows:
PV = $2,600/1.06 + $2,600/1.06² + $2,600/1.06³ + $2,600/1.06⁴ + $2,600/1.06⁵ + $2,200/1.06⁶ + $2,200/1.06⁷ + $2,200/1.06⁸ + $2,200/1.06⁹ + $2,200/1.06¹⁰ = $17,877
that means that the maximum amount that can be invested = $17,877, and that way the NPV = 0
The following units of an inventory item were available for sale during the year: Beginning inventory 8 units at $49 First purchase 15 units at $51 Second purchase 27 units at $53 Third purchase 14 units at $55 The firm uses the periodic inventory system. During the year, 26 units of the item were sold. The value of ending inventory rounded to the nearest dollar using average cost is (Round average cost per unit to three decimal place.)
Answer:
$1,994
Explanation:
The computation of the ending inventory is shown below:
But before that the average cost is
= Total amount of purchased ÷ total units available
= (8 units × $49 + 15 units × $51 + 27 units × $53 + 14 units × $55) ÷ (8 units + 15 units + 27 units + 14 units)
= ($392 + $765 + $1,431 + $770) ÷ (64 units)
= $52.469
Now the ending inventory units is
= 64 units - 26 units
= 38 units
So, the ending inventory is
= 38 units × $52.469
= $1,994
During the most recent month, the following activity was recorded: Twenty thousand pounds of material were purchased at a cost of $2.35 per pound. All of the material purchased was used to produce 4,000 units of Zoom. 750 hours of direct labor time were recorded at a total labor cost of $14,925. Required: 1. Compute the materials price and quantity variances for the month. 2. Compute the labor rate and efficiency variances for the month.
Answer: See explanation
Explanation:
The following can be derived from the question:
Actual quantity = 20,000 pounds
Actual price = $2.35
Standard price = $2.50 per unit
Actual hours = 750 hours.
The standard quantity will be calculated as:
= 4,000 units × 4.6
= 18,400 pounds
The Actual rate will be calculated as:
= Total labor cost / Actual hours
= $14,925 / 750
= $19.90
Standard hours will be:
= 0.2 hours × 4,000 units
= 800 hours.
Standard rate = $18 per hour
1. Compute the materials price and quantity variances for the month.
Material price variance:
= (AQ × AP) - (AQ × SP)
= (20,000 × $2.35) - (20,000 × $2.50)
= 47000 - 50000
= -3000
Material quantity variance:
= (AQ × SP) - (SQ × SP)
= (20,000 × $2.50) - (18,400 × $2.50)
= 50,000 - 46000
= 4000
2. Compute the labor rate and efficiency variances for the month.
Labor rate variance:
= (AH × AR) - (AH × SR)
= ($750 × $19.90) - (750 × $18)
= 14925 - 13500
= 1425
Labor efficiency variance:
= (AH × SR) - (SH × SR)
= (750 × $18) - (800 × $18)
= 13500 - 14400
= 900
An investor implements a collar strategy by purchasing 100 shares of the Tesla stock at a price of $840 per share, selling 100 call options on the Tesla stock with a strike price $880 per share, and buying 100 put option on the Tesla with a strike price of $800. The premium of the call option is $35 per share and the premium of the put option is $32. At which stock price at the maturity of the option will the investor break even
Answer: $837
Explanation:
The following information can be gotten from the question:
Purchase price = $840 per share
Premium of call option = $35 per share
Premium of put option = $32 per share
From the above, the premium received will be:
= $35 - $32 = $3
Investors break even will then be:
= Purchase price - Premium received
= $840 - $3
= $837
RJ Corporation has provided the following information about one of its inventory items:
Date Transaction
1/1 Beginning Inventory
6/6 Purchase
9/10 Purchase
11/15 Purchase
During the year, RJ sold 3,000 units.
Number of Units 400 800 800 1,200 800
Cost per Unit $3,200 $3,600 $4,000 $4,200
What was ending inventory using the LIFO cost flow assumption under a periodic inventory system?
a. $880,000.
b. $640,000
c. $770,000.
d. $840,000
Answer:
b. $640,000
Explanation:
The computation of the ending inventory using the periodic inventory system is as follows:
But before that the ending inventory units is
= Beginning inventory units + purchased units - sold units
= 400 + 800 + 1,200 + 800 - 3,000
= 200 units
Now the ending inventory is
= 200 units × $3,200
= $640,000
hence, the ending inventory using the periodic inventory system is $640,000
Therefore the correct option is B
Which factor would influence the premiums of health insurance?
A.) Building Size
B.) Deductible
C.) Elimination Period
D.) Profession
Answer:
B.) Deductible
Explanation:
A deductible is an amount that the insured must pay himself/herself before the insurance company starts paying his/her medical expenses. E.g. if your deductible is $1,000, before your medical expenses are paid by your insurance company, you will have to pay the $1,000 yourself.
The higher the deductible, the lower the insurance premium. This applies to every single type of insurance policy where deductibles might apply.
Answer:
deductible
Explanation:
“EBIT is generally considered to be independent of financial leverage, because EBIT is the result of a firm’s operating effectiveness. However, with an excessive debt levels, EBIT might actually be influenced by financial leverage.”
Comment on the statement above.
Answer:
The answer is below
Explanation:
EBIT is known as an accounting measure to determine the profit level of a firm. It is an acronym of Earnings Before Interest and Taxes.
EBIT is generally considered to be independent of financial leverage because EBIT is the result of a firm’s operating effectiveness.
This is true because, EBIT is based on the firm's level of sales and cost of operation, of which financial leverage has no effects on it.
However, with excessive debt levels, EBIT might be influenced by financial leverage.
This implies that even though the financial leverage of a firm has no direct influence on EBIT, in a situation whereby a firm is operating at huge deficits, every aspect of the film will be concerned. This will include staff, customers, investors, and operational activities, thereby affecting the firm's sales and cost of operation. As a result, this will ultimately affect the firm's EBIT.
Two alternatives, code-named X and Y, are under consideration at Afalava Corporation. Costs associated with the alternatives are listed below. Alternative X Alternative Y Materials costs........ $37,000 $37,000 Processing costs...... $38,000 $53,000 Equipment rental.... $12,000 $26,000 Occupancy costs...... $16,000 $26,000 Are the materials costs and processing costs relevant in the choice between alternatives X and Y
Answer:
Only materials costs are relevant
Explanation:
Here in the given situation, the processing cost is only relevant and considered this represents that it helps to make the decisions.
While on the other hand, the material cost is not relevant but it would be continue for each alternative course of action
Therefore the first option is correct
The same is to be considered
Diego Garcia is 32 years old. Diego earned $112,000 in 2020 while employed as a financial analyst. The combined CPP and El deduction during 2020 totaled
$3,754. Of this amount, $166 was the CPP enhanced contribution. The following information was also provided pertaining to the 2020 taxation year:
a) Diego enrolled in part-time studies at the local university, paying tuition fees of $1,500.
b) Diego donated $2,000 to a registered charity for tax purposes, and $800 to a federal political party.
c) During the year, a total of $4,500 was spent on eyeglasses, dental care, and prescriptions, and none of this amount was reimbursed.
d) Diego's spouse did not work during 2020 while attending full-time post-secondary classes which cost $8,000 in tuition. The maximum allowed amount was
transferred to Diego for 2020 tax purposes. Diego's spouse had no other income during the year.
e) Diego ha a $2,000 non-capital loss from 2019.
f) The couple does not have any children.
Required:
A. Calculate Diego's taxable income for 2020.
B. Calculate Diego's federal tax liability for 2020.
If someone knows this.. please help
Answer:
the answer is A
Explanation:
(THIS IS FOR THE OFFICE FANS!!)
Who (based on proof) do you think the Scranton Strangler?
A. Toby Flenderson
B. Robert California
C. Dwight Schrute
D. Gabe Lewis
E. Creed Bratton
(I will give my observation in the comments section)
Answer:
E
i say creed bc he just seems like it
Explanation:
dwight schrute akdjdkd blah blah blah minimum characters
Billie Bob purchased a used camera (five-year property) for use in his sole proprietorship in the prior year. The basis of the camera was $2,400. Billie Bob used the camera in his business 60 percent of the time during the first year. During the second year, Billie Bob used the camera 40 percent for business use. Calculate Billie Bob's depreciation deduction during the second year, assuming the sole proprietorship had a loss during the year.
Answer:
Billie Bob
Depreciation deduction during the second year is:
$192.
Explanation:
a) Data and Calculations:
Property basis value = $2,400
Useful life = 5 years
Depreciable rate per year = $2,400/5 = $480
Depreciation deduction during the second year = $480 * 40% = $192
b) The depreciation deduction for year 2 is limited to the 40% business use. This implies that Billie Bob cannot claim the 100% depreciation of $480 for the property since he could only use it 40% for his business.
The Aros smart window air conditioner has gone through all of the first five stages of the product development process, and the marketing team has its marketing mix figured out for the product. They launch the product through the Quirky website to a broader market than the test group, in order to see if the positioning and messaging for the product hits the right mix for the market. What is the marketing team doing in this stage
Answer:
They are testing the product's marketing mix with a wider market and validating its effectiveness
Explanation:
Marketing mix is a combination of factors that a company considers when they are marketing a product to the consumer.
They are price, product, place, and promotion.
For sales of a product to be successful the marketing mix must be effective in the target consumers.
Tests are carried out on a test sample of buyers and then to a larger population to test efficacy of the marketing mix before launching the product.
In the given scenario Aros Smart window launched the product through the Quirky website to a broader market than the test group, in order to see if the positioning and messaging for the product hits the right mix for the market.
They are testing the product's marketing mix to determine its effectiveness
You are purchasing a home for $220,000. The down payment is 30% and the balance will be financed with a 20-year mortgage at 9% and 2 discount points. You put down a deposit of $5,000 (applied to the down payment) when the sales contract was signed. You also have these expenses: credit report, $70; appraisal fee, $110; title insurance premium, 1% of amount financed; title search, $225; and attorney's fees, $600. Find your amount due at the closing.
Based on the various payments on the home, the amount due at closing is $66,625.
What is the amount due on closing?$5,000 has already been taken from the down payment which leaves:
= 30% x 220,000 - 5,000
= $61,000
Loan amount is:
= (1 - 30%) x 220,000
= $154,000
Closing amount is:
= 61,000 + 70 + 110 + (1% x $154,000) + 225 + 600 + (2% discount points x 154,000)
= $66,625
Find out more on closing costs at https://brainly.com/question/26133271.
Rachel's Designs has 1,900 shares of 6%, $50 par value cumulative preferred stock issued at the beginning of 2019. All remaining shares are common stock. Due to cash flow difficulties, the company was not able to pay dividends in 2019 or 2020. The company plans to pay total dividends of $19,000 in 2021. How much of the $19,000 dividend will be paid to preferred stockholders and how much will be paid to common stockholders
Answer:
Preferred Dividend = $17,100Common Dividend = $1,900Explanation:
Cumulative preferred stockholders will always have their dividends paid to them eventually because the dividends will accrue for years where they went unpaid.
This means that in 2021 they will be paid their dividends for the years 2019, 2020 and 2021.
Yearly preferred dividend = 1,900 * 6% * 50
= $5,700
Preferred dividends in 2021 = 5,700 * 3
= $17,100
Common stockholders would get = 19,000 - 17,100
= $1,900
g Coronado Industries sold some of its plant assets during 2021. The original cost of the plant assets was $902000 and the accumulated depreciation at date of sale was $842000. The proceeds from the sale of the plant assets were $89800. The information concerning the sale of the plant assets should be shown on Coronado's statement of cash flows (indirect method) for the year ended December 31, 2021, as a(n)
Answer and Explanation:
Since the following information is mentioned in the question
The purchase cost is $902,000
Accumulated depreciation is $842,000
The proceeds from the sale of plant asset is $89,800
So based on the above information, the sale of the plant asset would be shown in the investing activities of the cash flow statement in a positive amount
Hence it would be reported under the investing activities section
Hygdye218 Corporation has two divisions: the Domestic Division and the Foreign Division.The Hygdye218 Corporation's net operating income is $84,300.The Domestic Division's divisional segment margin is $48,200 and the Foreign Division's divisional segment margin is $172,000.
What is the amount of the Hygdye218 Corporation's common fixed expense not traceable to the individual divisions?
A. $132,500
B. $135,900
C. $256,300
D. $220,200
Answer:
B.$135,900
Explanation:
Calculation for What is the amount of the Hygdye218 Corporation's common fixed expense not traceable to the individual divisions
Using this formula
Net operating income = Segment margin - Common fixed expenses
Let plug in the formula
$84,300 = ($48,200 +$172,000) - Common fixed expenses
$84,300= $220,200 - Common fixed expenses
Common fixed expenses = $220,200 - $84,300
Common fixed expenses= $135,900
Therefore the amount of the Hygdye218 Corporation's common fixed expense not traceable to the individual divisions will be $135,900
what are two suggestions for finding a job?
1. plan ahead and organize for both the application and if you actually get the job.
2. do something you love that fits your personality!
Answer:
Look online since it's a pandemic going on right now, try to find a good paying job that you can do without breaking your back and also has good pay like 15$ or 20$ a hour is good for starters, in certain schools, you can get paid for doing certain things but if really needed to, you can go into a store that you would want to work at to see if they have any openings. Hope this helps! Have a nice day!
Explanation:
Which of the following characteristics accurately describes the stock market?
An active market that determines the price of a firm’s shares
A fixed-income market where participants buy and sell debt securities
The bid-ask spread in a dealer market represents the profit that a dealer would make on a transaction involving a security. Which of the following statements best describes the bid-ask spread?
The difference between the closing price of the security and the opening price of the security on the day of the transaction.
The sum of the price at which a dealer is willing to buy a security and the price at which a dealer is willing to sell it.
The difference between the price at which a dealer is willing to buy a security and the price at which a dealer is willing to sell it.
Fernando, a trader, wants to buy 1,000 shares of XYZ stock, while a second trader, Ally, is willing to sell 1,500 shares of the same stock. Unfortunately, Fernando and Ally don’t know one another and must complete their transactions using the stock exchange’s market-making dealer. XYZ’s market maker is willing to sell her shares for $26.80 per share and purchase additional shares for $26.25 per share. Select the most appropriate values in the following table:
Bid price 26.25, 25.80, 31.50
Ask price 40.20,26.80,26.25
Bid-ask spread 26.25,87.67,0.55
If the market maker is willing to purchase the entire block of 1,500 shares from Ally and, from that block, resell 1,000 shares to Fernando, then the market maker’s net profit from Fernando’s transaction—excluding any inventory effects—will be:_________
a) 275,00
b) 825.00,
c) 503.00,
d) 550.00
Answer:
1. The characteristic that accurately describes the stock market is:
An active market that determines the price of a firm’s shares.
2. The statement that best describes the bid-ask spread is:
The difference between the price at which a dealer is willing to buy a security and the price at which a dealer is willing to sell it.
3. Bid price = $26.25; Ask price = $26.80
4. Fernando’s transaction—excluding any inventory effects—will be:_________
d) 550.00
Explanation:
a) Data and Calculations:
XYZ's market maker:
Sell shares at $26.80 * 1,000 = $26,800
Buy shares at $26.25 * 1,000 = 26,250 ($39,375 - 13,125)
Net profit $550
Thus, the inventory of shares = $13,125 ($26.25 * 500)
b) The bid price is the amount per share that the XYZ market maker is willing to buy the 1,500 Ally shares. The ask price is the amount per share that the market maker is willing to sell the 1,000 shares to Fernando. The bid-ask spread represents the difference between the bid price and the ask price. It is the profit margin for the market maker.
Aikman, Inc., manufactures and sells two products: Product O6 and Product O7.Data concerning the expected production of each product and the expected total direct labor-hours (DLHs)required to produce that output appear below:
The direct labor rate is $17.50 per DLH.The direct materials cost per unit for each product is given below:
The company has an activity-based costing system with the following activity cost pools, activity measures, and expected activity:
The unit product cost of Product O6 is closest to:
A) $637.15 per unit
B) $896.71 per unit
C) $721.00 per unit
D) $661.45 per unit
Question Completion:
Aikman, Inc., manufactures and sells two products: Product O6 and Product O7.Data concerning the expected production of each product and the expected total direct labor-hours (DLHs)required to produce that output appear below:
Expected DLH Total DLH
Production
Product 06 200 9.00 1,800
Product 07 800 10.00 8,000
Total 1,000 9,800
The direct labor rate is $17.50 per DLH.The direct materials cost per unit for each product is given below:
Direct Materials
Costs / unit
Product 06 $206.50
Product 07 $162.30
The company has an activity-based costing system with the following activity cost pools, activity measures, and expected activity:
Activity Activity Estimated Product 06 Product 07 Total
Pool Measure Overhead
Labor-related DLHs $133,770 1,800 8,000 9,800
Product orders Orders 18,501 400 300 700
Order size MHs 145,180 3,000 3,100 6,100
Total $297,451
Answer:
Aikman, Inc.
The unit product cost of Product O6 is closest to:
B) $896.71 per unit
Explanation:
a) Data and Calculations:
Product 06 Product 07
Direct Materials costs $206.50 $162.30
Direct labor costs $157.50 $175.00
Overhead cost per unit $532.71 $238.64
Total cost per unit $896.71 $575.94
Product 06 Product 07
Direct labor costs 1,800 8,000
Direct labor rate $17.50 $17.50
Total labor costs $31,500 $140,000
Units of products 200 800
Labor cost per unit $157.50 $175.00
Overhead cost Allocation Product 06 Product 07 Total
Labor-related ($13.65) $24,570 $109,200 $133,770
Product orders ($26.43) 10,572 7,929 18,501
Order size ($23.80) 71,400 73,780 145,180
Total $106,542 $190,909 $297,451
Production units 200 800
Overhead cost per unit $532.71 $238.64
Corbel Corporation has two divisions: Division A and Division B. Last month, the company reported a contribution margin of $44,300 for Division A. Division B had a contribution margin ratio of 40% and its sales were $232,000. Net operating income for the company was $32,600 and traceable fixed expenses were $55,800. Corbel Corporation's common fixed expenses were:________.
a) $48,700
b) $55,800
c) $104,500
d) $137,100
Answer:
a. $48,700
Explanation:
Contribution margin for Division A = $44,300
Contribution margin for Division B = 40% * Sales Value = 40% * $232,000 = $92,800
Total contribution margin = $44,300 + $92,800 = $137,100
Office Segment Margin =Total contribution margin - Traceable fixed expenses
Office Segment Margin = $137,100 - $55,800
Office Segment Margin = $81,300
Net Operating Income = Office Segment Margin - Common Fixed Expenses
Common Fixed Expenses = Office Segment Margin - Net Operating Income
Common Fixed Expenses = $81,300 - $32,600
Common Fixed Expenses = $48,700
Based the talk by Alexander Wagner we learn that managers and employees who have protected values will sacrifice monetary advantage so that their efforts are consistent with these values.
A. True
B. False
Answer:
A) True
Explanation:
Based on some experiments, Alexander Wagner a SFI Professor from University of Zurich stressed on concept of protected values, he explained that an individual that has strong protected values will have less inclination to promote lies he received from others. He reveals individual motivation do comes from certain intrinsic values which is regarded as "protected values". And it has its own consequence in in the sense that individual have a better feeling when money is earned in a manner that suite one's value. It should be noted that Based on the talk by Alexander Wagner it was learnt that managers and employees who have protected values will sacrifice monetary advantage so that their efforts are consistent with these values.
ABC Company and XYZ Company entered into a nonmonetary exchange lacking commercial substance. In the exchange, ABC gave XYZ a building with a book value of $90,000 ($150,000 cost - $60,000 accumulated depreciation) and a fair value of $125,000 in exchange for $25,000 and an XYZ building with a book value of $80,000 ($95,000 cost - $15,000 accumulated depreciation) and a fair value of $100,000. Prepare the journal entry to record the exchange in ABC's and XYZ's books.
Answer:
New Building Acquired at Carrying Amount $90,000 (debit)
Accumulated Depreciation on Building given up $60,000 (debit)
Cost of Building given up $150,000 (credit)
Explanation:
Where the exchange transaction lacks commercial substance, the asset that is acquired is measured at the carrying amount (Cost less Accumulated Depreciation) of the asset given up, and no gain or loss cannot be estimated reliably.
The Building with Carrying Amount of $90,000 ($150,000 cost - $60,000 accumulated depreciation).
Thus the Journal will be :
New Building Acquired at Carrying Amount $90,000 (debit)
Accumulated Depreciation on Building given up $60,000 (debit)
Cost of Building given up $150,000 (credit)