Arca Salvage purchased equipment for $10,000. Arca recorded total depreciation of $8,000 on the equipment. Assume that Arca exchanged the old equipment for new equipment, paying $4,000 cash. The fair market value of the new equipment is $5,000. Journalize Arca's exchange of equipment. Assume this exchange has commercial substance. Let's begin by calculating the gain or loss on the exchange of equipment. (Enter a loss with a minus sign or parentheses.) Market value of assets received Less: Book value of asset exchanged Cash paid Gain or (Loss)
Arca Salvage purchased equipment for $10,000. Arca recorded total depreciation of $8,000 on the equipment. Assume that Arca exchanged the old equipment for new equipment, paying $4,000 cash. The fair market value of the new equipment is $5,000. Journalize Arca's exchange of equipment. Assume this exchange has commercial substance. Let's begin by calculating the gain or loss on the exchange of equipment. (Enter a loss with a minus sign or parentheses.) Market value of assets received Less: Book value of asset exchanged Cash paid Gain or (Loss)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Arca Salvage
purchased equipment for
$10,000.
Arca
recorded total depreciation of
$8,000
on the equipment. Assume that
Arca
exchanged the old equipment for new equipment, paying
$4,000
cash. The fair market value of the new equipment is
$5,000.
Journalize
Arca's
exchange of equipment. Assume this exchange has commercial substance. Let's begin by calculating the gain or loss on the exchange of equipment. (Enter a loss with a minus sign or parentheses.)
|
Market value of assets received
|
|
|
|
Less:
|
|
|
|
Book value of asset exchanged
|
|
|
|
Cash paid
|
|
|
|
Gain or (Loss)
|
|
|
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