Layne Co. has a machine that cost $516,000 on March 20, 2011.This old machine had an estimated life of ten years and a salvagevalue of $25,000. On December 23, 2015, the old machine isexchanged for a new machine with a fair value of $324,000. Theexchange lacked commercial substance. Layne also received $36,000cash. Assume that the last fiscal period ended on December 31,2014, and that straight-line depreciation is used.
Show the calculation of the amount of gain or loss to berecognized by Layne Co. from the exchange
Prepare all entries that are necessary on December 23, 2015.Show a check of the amount recorded for the new machine
Layne Co. has a machine that cost $516,000 on March 20, 2011.This old machine had an estimated life of ten years and a salvagevalue of $25,000. On December 23, 2015, the old machine isexchanged for a new machine with a fair value of $324,000. Theexchange lacked commercial substance. Layne also received $36,000cash. Assume that the last fiscal period ended on December 31,2014, and that straight-line depreciation is used.
Show the calculation of the amount of gain or loss to berecognized by Layne Co. from the exchange
Prepare all entries that are necessary on December 23, 2015.Show a check of the amount recorded for the new machine
Related questions
Rogers Co. had a sheet metal cutter that cost $115,000 onJanuary 5, 2010. This old cutter had an estimated life of ten yearsand a salvage value of $20,000. On April 3, 2015, the old cutter isexchanged for a new cutter with a fair value of $60,000. Theexchange lacked commercial substance. Rogers also received $15,000cash. Assume that the last fiscal period ended on December 31,2014, and that straight-line depreciation is used.
A. Calculate the gain or loss to be recognized by Rogers Co.Show calculations.
B.Prepare all entries that are necessary on April 3, 2015.
| Account Titles and Explanation | Debit | Credit |
| ( ABOVE record depreciation.) | ||
(ABOVE record exchange of machineries.) |
